Preliminary Analysis of the MERCOSUR and European Union Agreement, 2019

Preliminary Analysis of the MERCOSUR and European Union Agreement, 2019

The World’s Biggest Agreement between Economic Blocs to Boost Trade in Goods and Services with the European Automotive Sector Enjoying a Tax Reduction on Exports to MERCOSUR from 35% to 0%

RELEASE DATE
21-Nov-2019
REGION
Latin America
Research Code: 9AB2-00-EB-00-00
SKU: AU01919-LA-MR_23805

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Description

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.

Frost & Sullivan 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. Frost & Sullivan analyses will be updated accordingly.

Author: Guira Barretto

Table of Contents

Key Findings

MERCOSUR Bloc—History and Details

MERCOSUR / EU—Key Facts

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

Key Initiatives

MERCOSUR / EU Agreement—Key Topics

MERCOSUR / EU Agreement—Most Benefited Sectors

MERCOSUR / EU Agreement—Tariff Reductions

Implementation Timeline & Next Steps

Automotive—Tariffs Reduction

Automotive Technical Barriers—Homologation Tests and Reports

Automotive—Key Agreement Impacts on the Automotive Sector

Growth Opportunity—Automotive

Strategic Imperatives for Success and Growth

Key Conclusions

Legal Disclaimer

List of Exhibits

List of Exhibits (continued)

The Frost & Sullivan Story

Value Proposition—Future of Your Company & Career

Global Perspective

Industry Convergence

360º Research Perspective

Implementation Excellence

Our Blue Ocean Strategy

Related Research
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. Frost & Sullivan 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. Frost & Sullivan analyses will be updated accordingly. Author: Guira Barretto
More Information
No Index No
Podcast No
Author Guira Barretto
Industries Automotive
WIP Number 9AB2-00-EB-00-00
Is Prebook No
GPS Codes 9800-A6,9B01-A6,9963-A6,9A70-A6,9694,9832-A6,9882-A6,9965-A6,9A57-A6,9AF6-A6