A good day for Europe’s competitiveness: op-ed by Ursula von der Leyen, President of the European Commission

This article is brought to you in association with the European Commission.

Europe has always been a trading continent, but we are now facing a world where trade barriers are on the rise. Our companies and farmers are encountering growing restrictions, unfair competition and geopolitical uncertainties – all of which threaten their competitiveness. The new partnership between the European Union and Mercosur represents an opportunity to reverse this trend. This is why I travelled to Montevideo this week: to conclude our negotiations and unlock the value of a closer cooperation with a large, fast-growing market of over 260 million people.

Five years ago, we reached an initial agreement in principle between the European Union and Mercosur countries – Brazil, Argentina, Uruguay and Paraguay. However, it sparked concerns across different sectors of Europe’s societies and the economy, ranging from farmers to consumers’ associations and environmental NGOs.

We have listened carefully to these voices, and in five years of negotiations, we have addressed each concern directly. The agreement that we have now reached has the strongest protections ever incorporated into a trade agreement. It protects our most essential economic sectors, including agriculture and food. It protects our consumers by enforcing high standards. And it prioritises the protection of our planet and its green lungs. This is not the same deal as five years ago – it has been transformed. Today, we can confidently say it is a better deal for the people of Europe.

This new partnership comes at a pivotal moment for Europe. The global landscape has become more fragmented and confrontational than it used to be. Last year, trade restrictions worldwide have more than tripled in value. To overcome these challenges, we must forge stronger ties with like-minded partners.

The European Union and Mercosur will create a market of 700 million people. This will bring immediate benefits first and foremost to the tens of thousands of European companies – half of them small and medium-sized enterprises – that already trade with Latin America. Mercosur’s tariffs on European products are steep: 35% on fashion, 27% on wine, and up to 55% on other agri-food products. The agreement will eliminate almost all tariffs on all products, and this saves EU-exporters up to 4 billion euros per year – and open this dynamic market to European exporters.

This is also the most comprehensive agreement ever negotiated for protecting European food and drinks. More than 350 European products will be protected by a geographical indication. This means that it will be illegal to sell imitations or fakes. For example, no more “Comté-style cheese” will be sold in Mercosur supermarkets – only the original, Made in France. For the first time ever, European inspectors will have the opportunity to check and stop such practices.

With this deal, European farmers will benefit from new safeguards. We negotiated import ceilings for sensitive agri-food products: Mercosur imports will represent only a small fraction of European consumption – 0.1% for pork and 1.5% for beef. Crucially, Mercosur exporters must meet the same rigorous standards as European producers. To ensure that this is always the case, we have agreed on stronger controls and closer cooperation with local authorities in Mercosur countries.

The European Commission will monitor market developments closely after the agreement is implemented, particularly with regard to the agricultural sector. We will ensure that the partnership with Mercosur will be a win for European farmers – as well as for European consumers. For the unlikely event that the agricultural sector in Europe is negatively impacted following the implementation of the new agreement, we intend to set up a reserve worth at least one billion euros. This is our insurance policy for our farmers and rural areas. And together with the European agricultural sector, we will launch new measures to simplify and reduce red tape for them.

The deal is also good news for European industries that rely on raw materials from abroad. The demand for critical minerals needed for clean and digital technologies will triple by the decade’s end. The global race to control their production and trade is already underway. Mercosur countries are among the largest global producers of lithium, iron ore, nickel and more. The new partnership will lower or remove export taxes. It will eliminate export restrictions and monopolies. And it will diversify our suppliers and reduce our overdependencies. On imports as much as on exports, the EU-Mercosur agreement will enhance Europe’s competitiveness across the board.

The economic case for this agreement is clear. But for Europe, trade agreements are not just about economics. This new agreement is also a geopolitical necessity. Trade partnerships are a way to build and strengthen communities of shared values. This is also the case for our partnerships with Mercosur. Both sides share so much, a common history, culture, languages. We both believe that climate change is the defining challenge of our time. So the deal reflects our joint commitment to the Paris Climate Agreement and the fight against deforestation. The European Union and Mercosur also share the belief that international cooperation is the true engine of progress and prosperity. While other powers are moving in the opposite direction, we choose to stand together on the global stage, for freer and fairer trade.

This is why today is a good day for Europe and Mercosur. A generation of leaders has dedicated years to reaching a deal with the best conditions for Europe. Now it is time for future generations – of consumers and companies, families and farmers – to reap its benefits. This is how we act on our shared goal to boost Europe’s competitiveness.