Trade deal between EU and Mercosur provides welcome stimulus for Finnish industry

The European Commission and four Mercosur countries, Brazil, Argentina, Paraguay and Uruguay, reached an agreement on a trade deal on 6 December 2024. Upon approval, the partnership agreement would open up a large market for European Union businesses. Removing the high tariffs in the Mercosur countries is expected to save EU companies an estimated EUR 4 billion in tariffs per year, boosting trade, investment and economic growth. Dismantling trade barriers would also help European companies diversify their supply chains.

“Finalising the Mercosur agreement after 25 years of negotiations is a major achievement, both economically and politically,” says Tuomas Tapio, Director General of the Department for International Trade at the Ministry for Foreign Affairs. "The significant tariff reductions, which were agreed for several trade sectors, will directly benefit many Finnish companies. This is particularly important in a situation of global rising protectionism."

The trade deal includes several points on sustainable development. In addition to the standard elements of EU trade agreements, such as labour rights and environmental protections, the agreement lays out a commitment to the Paris Agreement on climate change, according to which a breach of the Paris Agreement could lead to suspension of trade benefits. The trade deal also includes a commitment to prevent deforestation.

Finland has supported the agreement since the negotiations began. Some EU Member States are critical of the agreement, expressing their concern that it would weaken the competitiveness of EU agriculture.

The trade deal can enter into force only after the EU Member States, the European Parliament and national parliaments have approved it. The agreement struck at this time is therefore the first step towards its adoption and implementation. The Commission will publish the content of the agreement on its website over the next days. Following a legal review, the text will be translated into all official EU languages and then submitted to the Council of the European Union and the European Parliament.

According to the latest statistics on goods trade, exports from Finland to Mercosur amounted to EUR 805.9 million in 2023, accounting for 1.1% of Finland's total exports in euros. Imports from Mercosur to Finland amounted to EUR 789.6 million in 2023, representing 1% of imports. Lower tariffs and removal of trade barriers are expected to increase trade between Finland and Mercosur.