European Automotive suppliers welcome the EU-Mercosur concluded landmark agreement
On 28th June, the EU-Mercosur FTA negotiations were concluded in a landmark agreement.
The EU and Mercosur markets combined account for a population of 780 million people, to which the EU automotive industry will now be able to introduce its technology content, benefitting from an integration of global value chains, with the gradual liberalisation of tariffs and dismantling of non-tariff barriers, which has hitherto kept the Mercosur market closed.
CLEPA welcomes the outcome of the negotiations, that will consolidate a strategic political and economic partnership and create significant opportunities for sustainable growth on both sides.
The next steps include a legal revision of the agreed text to come up with the final version of the Association Agreement and all its trade aspects. The European Commission will then translate it into all official EU languages and submit the Association Agreement to EU Member States and the European Parliament for approval.
EU’s exports to the four Mercosur countries totalled €45 billion in 2018, and EU’s exports to Mercosur include machinery (28.6%) and transport equipment (13.3% of total exports).
The EU-Mercosur region-to-region agreement will remove the majority of tariffs on EU exports to Mercosur, making EU companies more competitive by saving them €4 billion worth of duties per year. As regards EU industrial sectors, this will help boost exports of EU products that have so far been facing high and sometimes prohibitive tariffs, and will progressively remove duties on automotive parts (taxed at 14-18%) and vehicles (taxed at 35%). The main features of the deal are:
• Automotive component parts will be fully liberalised within 15 years of entry into force of the FTA. The first 7 years will be a grace period for MERCOSUR tariffs, from year 8, significant duty rates will be applied
• The agreement contains a Automotive Annex which will bind MERCOSUR to recognising the equivalency of EU / UN Regulations and paving the way for the adoption of EU and international technical standards
• The two sides will simplify their customs procedures
• Sustainable development forms an important commitment, implementing the Paris Climate Agreement
• A bilateral safeguard mechanism will be triggered in the event of a surge of imports which threaten or cause to threaten injury
• A solid IPR chapter covering enforcement and protection of copyrights, patents, Trade Marks and trade secrets, bringing MERCOSUR in line with international IP treaties
• Adoption of a more EU-style Rules of Origin for automotive sector, with approximately 55% local content.
In: Growth & Competitiveness, Trade