The European Union and Mercosur
Updated October 8, 2015
The European Union and Mercosur
On June 10-11, 2015, the European Union (EU) hosted the
However, negotiations went slowly and were eventually
second EU-Community of Latin American and Caribbean
suspended in 2004 over fundamental differences,
States (CELAC) Summit in Brussels. This summit, attended
particularly what the EU felt was an unacceptable degree of
by the heads of state and foreign ministers of the 33
protectionism in the trade chapter championed by countries
members of the CELAC, was the most recent example of
such as Argentina and Brazil.
the EU’s long-term interest in, and maintenance of, its
political and economic relations with the Latin America
and Caribbean (LAC) region.
EU-Mercosur Basic Facts
At the conclusion of the EU-CELAC summit on June 11, a
* EU: 28 member states; Mercosur: 5 member states; 1
European Union-Mercosur Ministerial meeting was also
application pending.
held in Brussels as part of a long-standing relationship
* EU Headquarters: Brussels; Mercosur Secretariat:
between the EU and the nations of Mercosur. One of Latin
Montevideo; both have a six-month rotating presidency.
America’s largest regional integration projects, the bloc
* Population: EU: 500 million; Mercosur: 295 million.
consists of Argentina, Brazil, Paraguay, Uruguay, and
Venezuela. Bolivia’s membership was approved in 2015
* European Union GDP (2014): approx. €13.9 trillion ($14.6t)
and is awaiting ratification by Brazil and Uruguay.
* Mercosur countries GDP (2013); approx. $3.5 trillion
Mercosur functions as a customs union and free-trade area.
* EU is one of Mercosur’s top trading partners, accounting for
Although they do not have free trade in all areas among the
approximately 19.8% of Mercosur's total global trade.
member countries, they do have a common external tariff.
* Total trade (imports/exports) between EU and Mercosur:
The bloc has ambitions to become a common market along
€104 billion (2013).
the lines of the European Union.
* Trade in goods and services between EU and Mercosur:
At the EU-CELAC summit, Brazil’s president, Dilma
approximately €70 billion (2013).
Rousseff, stated that she hoped the EU-Mercosur
* EU is a leading foreign direct investor (FDI) in Mercosur,
negotiations that would lead to a new and formal
amounting to approximately €324 billion (2013).
relationship between the two blocs could be accelerated.
The Ministerial focused on the importance of deepening
Source: European Commission, Eurostat.
and expanding the relationship between both blocs, and, to
this end, the participants apparently had an open and frank
exchange of views on the state of play of the negotiations
for an ambitious, comprehensive, and balanced Association
In the interim, the EU had already negotiated bilateral
Framework Trade and Cooperation agreements with
Agreement.
Argentina (1990), Brazil (1991), Paraguay (1992), and
Background
Uruguay (1992). The objective of such agreements is to
strengthen existing relations between the parties and to
The European Union’s interest in developing closer
prepare the conditions enabling the creation of an
relations with Mercosur formally began in 1995, when the
interregional association that will cover trade and
EU and Mercosur signed an Interregional Cooperation
economic matters, cooperation regarding integration, and
Framework Agreement. The objective of the agreement
other fields of mutual interest in order to bring about closer
was to strengthen existing relations between the parties
relations between the parties and their respective
through a regularized dialogue in order to achieve a more
institutions.
comprehensive political and economic association and to
establish reciprocal liberalization of trade between the two
In addition, all Mercosur countries, with the exception of
regions. The Framework Agreement went into force in
Paraguay, no longer benefit from the EU's “Generalized
1999. At the EU-Latin America Summit held in Rio de
Scheme of Preferences” (GSP), which allows developing
Janeiro in June 1999, the EU heads of state and government
country exporters to pay less or no duties on their exports
decided to launch negotiations on an Association
to the EU. This gives countries vital access to EU markets
Agreement with Mercosur. In September 1999, the EU
and contributes to their economic growth.
Council adopted its negotiating directives, which allowed
the Commission to start negotiations with Mercosur in
Despite the lack of progress on the trade chapter, political
April 2000. The negotiations opened and included three
relations continued. During the EU-Mercosur Summit of
chapters: political dialogue, cooperation, and trade. The
Lima in 2008, an agreement to expand relations to three
parties agreed that the target date for the conclusion of
new areas—science and technology, infrastructure, and
these negotiations was to be October 2004.
renewable energy—was signed between the two blocs.
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The European Union and Mercosur
After a six-year suspension, negotiations on the Association
founded, namely the principles of liberty, democracy,
Agreement were re-launched in May 2010 at the EU-LAC
respect for human rights and fundamental freedoms, and the
Summit of Madrid and are currently ongoing. The main
rule of law. The Mercosur delegation covers relations with
objective is to negotiate a comprehensive agreement,
the countries of Mercosur. Every year, the Members of the
including a trade agreement covering not only trade in
Delegation visit the region and receive visits from members
industrial and agricultural goods but also services,
of the national parliaments from the Mercosur countries
improvement of rules on government procurement,
and from the Mercosur Parliament (Parlasur). The current
intellectual property, customs and trade facilitation, and
chairman of the delegation is Francisco Assis of Portugal.
technical barriers to trade.
Looking Ahead
EU Association Agreements
After 15 years of on again-off again negotiations for an
Association Agreements (AA) are international agreements
EU-Mercosur Agreement, it would appear that Mercosur
that the European Union negotiates with third countries or
is reaching a critical decision point regarding its future
organizations with the aim of setting up an all-embracing
relationship with Europe. FTAs are already in place
framework to conduct bilateral political, economic, and
between the EU and the CARIFORUM group of 16
trade relations. The EU typically concludes such
countries and between the EU and Central America.
agreements in exchange for commitments to political,
Ecuador, in 2014, signed a deal to adhere to the existing
economic, trade, or human rights reform in a country. In
EU-Andean Association Agreement with Colombia and
exchange, the country may be offered tariff-free access to
Peru. The EU also has FTAs in place with Chile and
some or all EU markets (industrial goods, agricultural
Mexico. Finally, the EU is negotiating a bilateral Political
products, etc.) and financial or technical assistance. More
Dialogue and Cooperation Agreement with Cuba, due to
recently, the EU has offered free-trade agreements (FTAs)
conclude by the end of 2015. In addition, the imminent
with their Association Agreements. EU FTAs are generally
entry into force of an EU-Canada FTA and the ongoing
not as comprehensive as the FTAs the United States
investment and trade negotiations between the EU and the
negotiates, and the tariff reductions are usually more
United States (under the proposed Transatlantic Trade and
limited. AAs differ in their exact content and finality
Investment Partnership, TTIP) will likely present problems
depending on the partner country; nevertheless, they more
for Argentina, Brazil, and Uruguay, which export mainly
often than not will provide for a privileged relationship
agricultural products to the EU. These countries will have
between the European Union and its partner. AAs create
more competition from Canada and the United States, two
bodies for the management of the cooperation and give
countries that are among the top agricultural exporters in
those bodies the authority to make decisions that bind the
the world and that compete directly with the members of
contracting parties. AAs generally comprise four broad
Mercosur on products such as meat, grains, dairy, and wine.
chapters: Common Foreign and Security Policy; Justice
and Home Affairs; Free-Trade Areas; and a fourth chapter
The EU also sees an agreement with Mercosur as a means
covering a range of issues including the environment,
to boost its exports to the LAC region and to help
science, transportation, and education. A clause on the
reinvigorate Europe’s economy. With a positive
respect of human rights and democratic principles is
commercial balance of trade with Mercosur, it could be
generally included in any agreement. Association
easier for the EU to reduce tariffs. The EU also desires to
Agreements are subject to approval by the European
strengthen its political and economic influence in the region
Parliament and must be ratified by all 28 member states of
in order to balance U.S. FTAs with other Latin American
the EU.
countries. The EU would also like to conclude an
Association Agreement with Mercosur as soon as possible
Parliamentary Dimension
as a means to compete with China’s economic activities in
Latin America. In order to do this, however, Mercosur, and
The European Parliament, as part of its normal oversight
in particular Argentina and Venezuela, will need to inject a
responsibilities, maintains numerous delegations (41) to
new energy and a sense of urgency into the negotiating
various non-EU countries and organizations, including the
process.
Delegation for Relations with Mercosur. The European
Parliament’s delegations maintain relations and exchange
information with other parliaments. Through its
Vincent L. Morelli, Section Research Manager
delegations, the European Parliament helps to represent the
IF10306
European Union externally and to promote in third
countries the values on which the European Union is
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The European Union and Mercosur
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https://crsreports.congress.gov | IF10306 · VERSION 3 · UPDATED