MERCOSUR AND THE EUROPEAN UNION AGREE HISTORIC AND AMBITIOUS TRADE AGREEMENT By Andrew Cannon, Florencia Villaggi and Silvia Marroquin\ On June 28, 2019, the European Union and the Common Market of the South (“Mercosur”), announced they had reached a trade deal after twenty years of negotiations (the “EU-Mercosur Agreement”). While the agreement in principle is still subject to ratification by the national parliaments of the member states of both blocs, the European Parliament and the European Union Council – a process that could take between one and two years – it lays the ground for an “ambitious and comprehensive trade agreement”,1 said to be the largest the European Union has ever concluded. The historic deal creates a market covering a population of 800 million people that represents nearly a fourth of the world’s GDP. In addition to removing tariffs, the new agreement aims to enhance the economic and political integration of both regions by creating employment and developing a more transparent and predictable regulatory framework. Trade between Mercosur and the European Union Mercosur is the economic bloc formed in 1991 by Argentina, Brazil, Paraguay and Uruguay. Venezuela joined in 2012 but was suspended from membership in 2017 for failing to meet the bloc’s basic standards. Bolivia’s accession is pending ratification by the parliaments of Mercosur member states since 2012. Mercosur created a common market that resulted in the free movement of goods and services, the elimination of tariff barriers and a common external tariff regime. The economic bloc also pursued the coordination of macroeconomic policies and national legislation among its member states. The European Union already has bilateral trade and cooperation agreements with Argentina, Brazil, Paraguay and Uruguay. The new trade agreement pertains to a wider Interregional Framework Cooperation Agreement in force since 1999. The Framework Agreement – which covers trade, economic matters and cooperation among other areas – was created to strengthen relations between the European Community and Mercosur. It sought to establish the foundations for a developed interregional association by gradually obtaining reciprocal liberalization of trade and promoting economic cooperation and integration in both regions. The European Union is Mercosur’s most important trading partner, representing 20% of Mercosur’s trade. With over 260 million consumers and an annual GDP of 2.2 trillion euros, Mercosur is the fifth largest economy outside the European Union and has consistently attracted European investments. As a consequence, over 60,500 European Union companies are present in the region and investment stocks reached 381 billion euros in 2017.2 The EU-Mercosur trade agreement: an ambitious agreement twenty years in the making Negotiations began in 2000 and entered different phases over the past two decades, featuring numerous discussions and forty rounds of negotiations. One of the main challenges faced was managing the efforts of negotiators from across the political spectrum in a wide variety of sectors.