EFTA deal benefits Brazil, Mercosur

A recently inked deal between Mercosur and EFTA (European Free Trade Association) will provide more favorable conditions for farmers and exporters in the American bloc member countries—Argentina, Brazil, Paraguay, and Uruguay. Some of the goods benefited with increased access to Europe are beef, poultry, wine, corn, honey, fruits, and vegetable oils.

The commercial agreement was signed last Friday (23), after ten rounds of talks were held since 2017. Now the document will be submitted to the parliaments in each member country for vote before becoming effective. However, the accord is brought into force bilaterally after it is ratified by an EFTA and a Mercosur nation.

Under the accord, EFTA—Iceland, Liechtenstein, Norway, and Switzerland—will eliminate tariffs for nearly all Mercosur-made products, considerably boosting their presence in the European market. Also, many agricultural goods will benefit from tax breaks—like citrus fruits, apples, peaches, nectarines, blueberries, plums, vegetables, pulses, wheat, malt, rice, soybeans, nuts, canned meat, citrus preparations such as jams, jellies and purees, fruit juices, animal feed, and fishery products.

EFTA countries represent a free trade zone with a total population of 14 million people and a GDP of 1.1 trillion dollars. In all, they rank fifth on the world list of trade of services and ninth for the trade of goods. Switzerland, Norway, and Iceland are among the five countries with the highest purchasing power.

Meat and olive oil

For beef, Switzerland will grant Mercosur a quota of 3 thousand tons of the product free of taxes. As for olive oil, this amount will be a thousand tons.

The deal is believed to boost the Brazilian GDP by $5.2 billion in 15 years. “A $5.9 billion increase and a $6.7 billion surge in Brazil’s total exports and imports have been estimated respectively, adding up to a growth of $12.6 billion in Brazil’s trade. A considerable expansion in investment in the same period is expected—something around $5.2 billion,” the ministry reported.

The pact is said to grant mutual access to services like communication, construction, tourism, transport, and financial services. “It will include transparency duties in public purchases and bolster competitiveness in purchases carried out by the state, resulting in optimized cost–benefit relations in concessions and the sparing of public funding. The commitments made will ensure Brazilian companies gain access to the market of EFTA public purchases, estimated at around $85 billion.”

A section of the deal relates to sustainable development, and reiterates multilateral commitments regarding child labor, forced labor, freedom of association, in order to attain economic sustainable and inclusive growth and eradicate poverty. The document also restates commitments regarding environmental topics in the Paris Agreement on climate change.