Series: Occasional Papers. 2601.
Author: Rodolfo G. Campos, Jacopo Timini, Francesca Viani and Elena Vidal
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Abstract
The European Union-Mercosur (Argentina, Brazil, Paraguay and Uruguay) Partnership Agreement (EMPA), reached after more than 25 years of negotiations, aims to create a more commercially integrated market between two regions that together represent over 770 million people. The agreement will progressively eliminate tariffs on over 90% of bilateral trade. However, certain products, particularly agricultural goods in the case of the EU, will remain subject to current tariffs or limited reductions through quotas. Overall, the agreement would lower the trade-weighted average applied tariff, the so-called “effective tariff”. For Mercosur, the effective tariff would drop from 11% before the agreement to just 1% after full implementation. For the EU, the effective tariff would fall from 4% to 2%. This reduction reflects the combined impact of tariff liberalization and agreed sectoral exceptions. In addition, the agreement includes measures to reduce non-tariff barriers, facilitate trade in critical raw materials and uphold environmental standards. According to recent studies, trade between the two regions could increase by around 40% in the long term.