The EU and South American economic bloc Mercosur have clinched a huge trade deal after 20-years of negotiations in a deal that Brazil’s President Jair Bolsonaro has called “historic” and “one of the most important trade deals of all time”.
Mercosur consists of Argentina, Brazil, Uruguay and Paraguay.
The deal aims to cut or remove trade tariffs, making imported products cheaper for consumers while also boosting exports for companies on both sides. It is set to create a combined market for goods and services covering nearly 800 million consumers, making it the largest in the world in terms of population.
The deal should significantly change the way Europeans do business in countries like Brazil – which has one of the world’s most closed economies. High tariffs have historically kept European competitors at a disadvantage against national industries.
Caterers will see that South American farmers will finally gain access to European food markets on low or zero tariffs. The deal is not without its critics, however. South American Beef is increasingly raised on pasture created from deforestation, and much of the world’s soybeans (predominately used in animal feed) is grown in a similar fashion. Both are major contributors to the Climate Change emergency. The BBC has recently discovered that the rate of deforestation in Brazil has increased dramatically since President Bolsonaro came to power. Globally, over 8.6m acres of virgin rainforest was destroyed by clearance in 2018.
It’s worth noting that Canada has recently announced its refusal to roll over their current EU trade agreement for the UK if a no-deal Brexit takes place, and there is currently no clarity about the position on the Mercosur deal in this regard.
Lovers of Argentine steak and red wine will therefore have to wait a while longer to discover if (and indeed for how long) an influx of lower cost food and drink products from South America can be expected.