The European Commission has published a lot of material about the free trade agreement concluded with Mercosur last summer. But the most interesting parts of the agreement – the market access offers in goods and services – were still missing.
Whether it’s the effect of last Sunday’s elections in Argentina or not: in any case it is Buenos Aires that is being more transparent in this case than Brussels. Today, Argentina’s ‘Ministry of Foreign Affairs and Worship’ published the tariff schedules of both the EU and Mercosur.
The schedules reveal the outcome of tough behind-the-scenes bargaining in agricultural or industrial sectors that have not been covered very much by the media during the negotiations. We all know that the reduction or removal on trade restrictions on autos, dairy, wines and spirits, sugar, ethanol, beef, poultry and pork have been the most difficult topics to deal with. But let’s leave these aside today and look at the other important bargains that have been struck.
Olive oil and pears
Take fruit and vegetables. For Argentina in particular, the Mercosur agreement offers a much better bargain than so far for its fruit and vegetable exports. No more ‘seasonal’ imports, no more high tariffs for products competing with Mediterranean and other produce, be it pears, citrus or artichokes. Within four to seven years of entry into force of the pact, these types of products will be able to enter the EU duty free – without destabilising markets in Europe too much as seasons differ.
Vegetable and seed oils will also benefit from duty free treatment within four to seven years. Importantly, Argentina, which has started to produce olive oil on a significant scale, will benefit from zero tariffs within four years.
Massive if slow industrial tariff phase outs in South America
The other interesting bargain is the one struck in the textile, apparel and footwear sector. The outcome of this negotiation was largely driven by cooperation between the textile organisations of the EU and Brazil. Although we don’t know the exact details yet of the specific rules of origin for the textile sectors, the tariff arrangement negotiated would allow operators in the textile and apparel industry to make plans.
Tariffs on both sides in the this sector will be phased out within ten years. Footwear tariffs in the EU will disappear within seven to ten years, yarn tariffs within four years, and fabrics and apparel duties within eight years. On the Mercosur side, tariffs on yarn will go after four years too; fabrics and apparel product duties will be phased out, as in the EU, within eight years.
On skimming through Mercosur’s tariff schedule one also understands why Germany was quite happy with the deal last summer and pressed for approval. Leaving aside the question of cars, what is interesting to see is that Mercosur has basically agreed to do away with most of its tariffs on its industrial sector – barring exceptions here and there – within ten to fifteen years. Tariffs in the area of chemicals, machinery, ICT, optical and measuring instruments, medical devices and medicaments are high in South America. Although the deal does not open up the floods of EU imports immediately, the Mercosur deal does seem to announce a real revolution in large swathes of South American industry in the coming years.
