October, 2019 – Brazil – Rossetti Advogados
Last July, Mercosur and the European Union (EU) concluded the negotiations of their first bi-regional trade agreement, twenty years after negotiations between both blocs began. As provided in the agreement, the main purpose is the immediate or gradual reduction of import tariffs between the European and South American countries — in many cases reducing duties to zero.
There are still questions about how Mercosur and the EU will give up free trade duties, because the ambitious agreement sets forth that there will be a tariff reorganization by means of which the UE agrees to eliminate 100% of its tariffs within 10 years, 80% of which already when the agreement comes into effect. In consideration, Mercosur will also be required to liberalize 91% of the trade volume and tariff lines with the Europeans.
However, according to the estimates of the Ministry of Economy, the agreement could increase and expand the Brazilian exports to the UE by up to US$ 100 billion over the next fifteen years. This impact is significant, considering that the Brazilian exports to the European bloc amounted to US$42 billion in 2018.
The trade agreement also includes issues such as trade facilitation, technical barriers, sanitary, phytosanitary and animal health measures, environment protection, labor rights and intellectual property. With respect to intellectual property, we note the acknowledgment of distinctive or typical products of the respective regions based on their geographical indication. As regards Brazil, the list of protected products includes “cachaça”, cheese, wine and coffee.
However, the agreement will only come into force after ratification and internalization by each of the Member States of both economic blocs. In practice, that means that the agreement must be approved by the national parliaments and governments of the 31 involved countries, which will take some years.
In any case, this agreement represents the commencement of a new perspective in the Brazilian trade, also overcoming the historical protectionism of the Brazilian economy with respect to the international trade, enabling especially the access to agricultural and industrial products included in the umbrella agreement and requiring the Brazilian products to compete with European products in their domestic market.
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For more information on the above or in other matters, please contact Maristela Abla Rossetti (mar@rraa.com.br) or Gilberto Rossetti (gmr@rraa.com.br).
This article is based on publicly available information and given for informational purposes only. It is not intended as legal advice or as a comprehensive analysis of the matters referred to herein.