Preliminary Analysis of the MERCOSUR and EU Agreement, 2019: Current Trading Structure, New Proposed Agreement, Impact on Automotive Sector, Growth Opportunities and Strategic Imperatives
During the last 20 years, the European Union (EU) and MERCOSUR have been discussing and developing a trade agreement to boost the economies of both blocs. After final approval, this may be the world's biggest agreement between economic blocs and will have a positive impact on trade of goods and services.
Ministries suggest that the agreement will impact a consumer market of 773 million people, and together the blocs will represent 25% of global GDP at 19 trillion.
MERCOSUR is the fifth-largest global economy, comprised of Brazil, Argentina, Paraguay, and Uruguay. Venezuela was suspended by the group due to a rupture in its democratic order. The MERCOSUR/EU agreement is in an advanced stage of approval and will move to the next step of legal review by all involved countries, which may occur in 2021.
MERCOSUR exports to EU are focused on agricultural products while EU exports to MERCOSUR are focused on automotive and machinery products. The agreement will create many benefits for each bloc and eliminate most of the critical barriers on trade.
Actual trade between the blocs is strong and quite important to MERCOSUR economy. Yet trade is facing a complex scenario tied to bureaucracy and barriers, such as tariffs, documents, certificates, and closed market dynamics, which are directly impacting results and opportunities.
To overcome most of these barriers, the agreement is focused on identifying and implementing alternatives to most of them.
This research on the MERCOSUR/EU Agreement is structured into 5 key areas:
Executive Summary: Key findings and key facts; Summarizes MERCOSUR bloc formation to generate trade and investment opportunities through the competitive integration of national economies with the international market
Current MERCOSUR/EU Trading Structure: Analyzes actual trade dynamics between the blocs (details on actual trade, complexities, and trade with EU by each MERCOSUR country)
Overview of New Proposed MERCOSUR/EU Agreement: Identifies the key initiatives, topics, most benefited sectors; maps the proposed tariff reductions, implementation timeline, and next steps
Impact of Proposed MERCOSUR/EU Agreement on Automotive Sector: Analyzes tariff reductions to the automotive industry, maps key actions on technical barrier improvements, and summarizes key impacts
Growth Opportunities and Strategic Imperatives: Focuses on growth opportunities for the automotive sector in MERCOSUR (e.g., Agreement Approval Process, Automotive Importation Tariff Reduction, MERCOSUR Importation Quota, New Vehicles Offers and Segments, New Business Models)
This is a preliminary analysis of the pending trade agreement firmed by the European Union and MERCOSUR, but final approval may take about two more years. As such, various topics and particularities may be revised. The publisher analyses will be updated accordingly.
Key Topics Covered
1. Executive Summary
Key Findings
MERCOSUR Bloc - History and Details
MERCOSUR/EU - Key Facts
2. Current MERCOSUR/EU Trading Structure
MERCOSUR Details by Country
MERCOSUR Actual Trade Details with the European Union
MERCOSUR/EU Actual Trade Complexity
Brazil - Trade with EU
Argentina - Trade with EU
Uruguay - Trade with EU
Paraguay - Trade with EU
3. Overview of New Proposed MERCOSUR/EU Agreement
Key Initiatives
MERCOSUR/EU Agreement - Key Topics
MERCOSUR/EU Agreement - Most Benefited Sectors
MERCOSUR/EU Agreement - Tariff Reductions
Implementation Timeline & Next Steps
4. Impact of Proposed MERCOSUR/EU Agreement on Automotive Sector
Automotive - Tariffs Reduction
Automotive Technical Barriers - Homologation Tests and Reports
Automotive - Key Agreement Impacts on the Automotive Sector
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