How should the EU-Mercosur agreement affect Brazilians’ pockets?

EU-Mercosur agreement will benefit the Brazilian economy The signing of the trade agreement between Mercosur and the European Union, which should take place this Saturday (17), after more than 25 years of negotiations, should change the flow of goods between the two blocs. Understand the agreement. In Brazil, the effects tend to reach both everyday consumption and productive sectors, such as industry and agribusiness. 📱Download the g1 app to see news in real time and for free Among the most noticeable changes, one should directly reach the consumer: the greater presence of traditional EU products in the Brazilian market. In addition to a possible reduction in the prices of wines, olive oils, cheeses and dairy products, for example, the expectation is that premium brands of chocolates and other supermarket items will also arrive in Brazilian lands for the first time. 🔍 The agreement provides for the gradual reduction or elimination of import and export tariffs, which reach more than 90% of total trade between the blocks. The text also establishes common rules for areas such as industrial and agricultural goods, investments and regulatory standards. In the case of wines, Europe has the largest global producers of the drink, such as Italy, France and Spain — which means that very good wines can be found in the region at low prices. And with the gradual reduction of the rate proposed by the agreement, the estimate is that the Brazilian consumer will have more access to this market, with more competitive prices. INFOGRAPHIC – Who wins and who loses with the agreement between the European Union and Mercosur Arte/g1 The same should happen with other products coming from Europe. Cars imported from there, for example, today face 35% taxation, which should be zeroed within 15 years, contributing to the lower price of these products. Medicines and pharmaceutical products — including those for veterinary use —, which are the main items imported from the EU by Brazil, with more than 8% of the total, should also feel the effects of the agreement. It is worth highlighting, however, that the price drop tends to be gradual, especially in complex items such as automobiles, due to the dependence on a global chain of components — including inputs from China. Gains in domestic production and exports The effects of the agreement also extend to imported inputs used by the industry and also opens doors for more Brazilian products to reach Europe. Here, access to cheaper European technologies can reduce costs for national companies and encourage investments in modernization — including for the countryside, which must spend less on machinery, equipment, fertilizers and agricultural implements, for example. Regarding exports, the treaty allows for the expansion of Brazilian sales of footwear, fruit and other agricultural products to the EU. According to the Brazilian Export and Investment Promotion Agency (Apex), the agreement creates a trade network valued at US$22 trillion (R$118.4 trillion), with the potential to increase Brazilian exports by an additional US$7 billion (R$37.7 billion). Footwear produced in Mercosur, currently subject to tariffs of 3% to 7% in the EU, must have these rates zeroed within four years. In some cases, such as grapes, the 14% tax will be eliminated as soon as the agreement comes into force. Last year, these sales were already growing: Brazil’s exports to the bloc reached US$49.8 billion (R$267.9 billion). Despite this, the trade balance remains more favorable to the European bloc, which exported US$50.3 billion (R$270.6 billion) to Brazil. INFOGRAPHIC – Next steps for the agreement between the European Union and Mercosur Art/g1 Understand the agreement 🤝 The objective of the treaty is to facilitate trade between the 27 countries of the European Union and the four Mercosur countries — Brazil, Argentina, Paraguay and Uruguay —, reducing customs duties both on European products sold in Brazil and on Mercosur products exported to Europe. 📊 The agreement covers a market of 720 million consumers — 450 million in Europe and 270 million in South America —, equivalent to around 25% of global GDP. 💰 Estimates from the Institute for Applied Economic Research (Ipea) indicate that Brazil should be the main beneficiary of the agreement. By 2040, the signature could increase the national Gross Domestic Product (GDP) by 0.46%, growth higher than that projected for the European Union and other Mercosur countries. See which countries are involved in the EU-Mercosur Agreement. Art/g1 EU-Mercosur Agreement is signed by the president of the European Commission and the presidents of Brazil, Argentina, Uruguay and Paraguay Image: TV Globo

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