South America’s Mercosur trade bloc and a group of four small European nations on Wednesday wrapped up talks on a sweeping free-trade agreement a decade in the making that will cover nearly all shipments between the countries.
The deal, which has largely been overshadowed by a stalled trade pact between Mercosur and the larger European Union, comes as the world’s trade balance shifts on uncertainty caused by U.S. President Donald Trump’s tariffs.
Mercosur and the European Free Trade Association (EFTA), comprised of Norway, Iceland, Switzerland and Liechtenstein, will benefit “from improved market access for more than 97% of their exports,” they said in a joint statement.
The deal, which still requires parliamentary approval and a legal review from members of both blocs, will create a free-trade area with almost 300 million people and a combined GDP of more than $4.3 trillion, the groups said.
Exploratory talks between EFTA and Mercosur, which includes Brazil, Argentina, Uruguay and Paraguay while Bolivia is in the process of becoming a full member, kicked off in 2015.
Reuters reported last year, citing sources, that an agreement with EFTA was among the most likely to be signed by Mercosur this year.
Brazilian Foreign Minister Mauro Vieira said that his government was hopeful the deal would be finalized in the second half of the year, when Brazil takes over the rotating Mercosur presidency, along with the pending deal between Mercosur and the EU.
That trade pact was agreed, at least in principle, in December last year, but has faced pushback from countries such as France. The EU member nation claims the deal’s current terms would harm its powerful agricultural sector.
MERCOSUR TARIFF, ENERGY BENEFITS
The Mercosur-EFTA agreement was firmed up in Buenos Aires as part of a summit led by the South American coalition.
Mercosur member states on Wednesday also agreed to expand the number of tariff-free imports coming from within the bloc.
Argentina had sought more exemptions to facilitate a possible trade deal with the United States, though libertarian President Javier Milei has also pushed for a potential agreement outside of Mercosur.
Argentina and Paraguay separately signed an agreement to weigh natural gas exports out of Argentina’s vast shale deposit, Vaca Muerta, to Paraguay and Brazil.
Argentina plans to turn the area into a key global energy-producing region that would help bring in foreign currency needed to prop up the economy, though those plans could be at risk due to a U.S. court ruling this week ordering the state hand over its majority stake in energy firm YPF.
(Reporting by Lisandra Paraguassu in Brasilia and Lucila Sigal in Buenos Aires)
