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EU and #Mercosur reach agreement on trade

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The European Union and Mercosur have reached a political agreement for an ambitious, balanced and comprehensive trade agreement
. The new trade framework - part of a wider Association Agreement between the two regions – will consolidate a strategic political and economic partnership and create significant opportunities for sustainable growth on both sides, while respecting the environment and preserving interests of EU consumers and sensitive economic sectors.

The EU is the first major partner to strike a trade pact with Mercosur, a bloc comprising Argentina, Brazil Paraguay and Uruguay. The agreement concluded today will cover a population of 780 million and cement the close political and economic relations between the EU and Mercosur countries. It represents a clear commitment from both regions to rules based international trade and will give European companies an important head start into a market with an enormous economic potential. It will anchor important economic reforms and modernisation undergoing in Mercosur countries. The agreement upholds the highest standards of food safety and consumer protection, as well as the precautionary principle for food safety and environmental rules and contains specific commitments on labour rights and environmental protection, including the implementation of the Paris climate agreement and related enforcement rules.

European Commission President Jean-Claude Juncker said: “I measure my words carefully when I say that this is a historical moment. In the midst of international trade tensions, we are sending today a strong signal with our Mercosur partners that we stand for rules-based trade. Through this trade pact, Mercosur countries have decided to open up their markets to the EU. This is obviously great news for companies, workers and the economy on both sides of the Atlantic, saving over €4 billion worth of duties per year. This makes it the largest trade agreement the EU has ever concluded. Thanks to the hard and patient work of our negotiators, this is matched with positive outcomes for the environment and consumers. And that's what makes this agreement a win-win deal.”

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Trade Commissioner Cecilia Malmström added: "Today's agreement brings Europe and South America closer together in a spirit of cooperation and openness. Once this deal is in place, it will create a market of 780 million people, providing enormous opportunities for EU businesses and workers in countries with whom we have strong historical links and whose markets have been relatively closed up to now. The agreement will save European companies over €4bn in duties at the border – four times as much as our deal with Japan – whilst giving them a head start against competitors from elsewhere in the world. It also sets high standards and establishes a strong framework to jointly address issues like the environment and labour rights, as well as reinforcing sustainable development commitments we have already made, for example under the Paris Agreement. Over the past few years the EU has consolidated its position as the global leader in open and sustainable trade. Agreements with 15 countries have entered into force since 2014, notably with Canada and Japan. This agreement adds four more countries to our impressive roster of trade allies.”

Agriculture and Rural Development Commissioner Phil Hogan said: “The EU-Mercosur agreement is a fair and balanced deal with opportunities and benefits on both sides, including for Europe's farmers. Our distinctive, high quality EU agri-food products will now get the protection in Mercosur countries that they deserve, supporting our market position and growing our export opportunities. Today's agreement also presents some challenges to European farmers and the European Commission will be available to help farmers meet these challenges. For this agreement to be a win-win, we will only open up to agricultural products from Mercosur with carefully managed quotas that will ensure that there is no risk that any product will flood the EU market and thereby threaten the livelihood of EU farmers.”

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Main features of the EU-Mercosur trade agreement

The EU-Mercosur region-to-region agreement will remove the majority of tariffs on EU exports to Mercosur, making EU companies more competitive by saving them €4 billion worth of duties per year.

  • As regards EU industrial sectors, this will help boost exports of EU products that have so far been facing high and sometimes prohibitive tariffs. Those include cars (tariff of 35%), car parts (14-18%), machinery (14-20%), chemicals (up to 18%), pharmaceuticals (up to 14%), clothing and footwear (35%) or knitted fabrics (26%).
  • The EU agri-food sector will benefit from slashing existing Mercosur high tariffs on EU export products, chocolates and confectionery (20%), wines (27%), spirits (20 to 35%), and soft drinks (20 to 35%). The agreement will also provide duty-free access subject to quotas for EU dairy products (currently 28% tariff), notably for cheeses.

Mercosur countries will also put in place legal guarantees protecting from imitation 357 high-quality European food and drink products recognised as Geographical Indications (GIs), such as Tiroler Speck (Austria), Fromage de Herve (Belgique), Münchener Bier (Germany), Comté (France), Prosciutto di Parma (Italy), Polska Wódka (Poland), Queijo S. Jorge (Portugal), Tokaji (Hungary) or Jabugo (Spain).

The agreement will open up new business opportunities in Mercosur for EU companies selling under government contracts, and to service suppliers in the information technology, telecommunications and transport sectors, among others. It will simplify border checks, cut red tape and limit the use of export taxes by Mercosur countries. Smaller companies on both sides will also benefit thanks to a new online platform providing easy access to all relevant information.

While delivering significant economic benefits, the agreement also promotes high standards. The EU and Mercosur commit to effectively implement the Paris Climate Agreement. A dedicated sustainable development chapter will cover issues such as sustainable management and conservation of forests, respect for labour rights and promotion of responsible business conduct. It also offers civil society organisations an active role to overview the implementation of the agreement, including any human rights, social or environmental concerns. The agreement will also provide for a new forum to work closely together on a more sustainable approach to agriculture and, as part of the political dialogue under the Association Agreement, address the rights of indigenous communities. The agreement also safeguards the EU and Mercosur's right to regulate in the public interest and preserves the right to organise public services in the way they consider appropriate.

EU food safety standards will remain unchanged and all imports will have to comply with the EU's rigorous standards, as is the case today. The agreed food safety, and animal and plant health provisions will reinforce cooperation with the authorities of the partner countries and speed up the flow of information about any potential risks through a more direct and efficient information and notification system. In this way, the agreement will increase our efficiency in ensuring the safety of the products traded between the EU and Mercosur countries.

The trade agreement reached today is part of a comprehensive new Association Agreement under negotiation between the EU and Mercosur countries. It is composed of a political and cooperation pillar – on which negotiators already reached a general agreement in June 2018 in Montevideo – and the trade pillar. Beyond trade, the agreement will enhance political dialogue and increase cooperation in areas such as migration, digital economy, research and education, human rights, including the rights of indigenous people, corporate and social responsibility, environment protection, ocean governance, as well as fight against terrorism, money laundering and cybercrime. It will also offer increased possibilities for cooperation at multilateral level. The Association Agreement will complete the network of Association Agreements in the Americas and consolidate the relations with the important partners in the region, supporting EU positions on many global issues.

Another milestone trade agreement concluded by the Juncker Commission

Agreement Population

covered

Trade in goods Trade in services Tariff savings
for EU companies
Joint GDP
Canada 550 million €72 billion €35 billion €0.6 billion €18 trillion
Japan 639 million €135 billion €53 billion €1 billion €21 trillion
Mercosur 773 million €88 billion €34 billion Over €4 billion €19 trillion

Next steps

Both sides will now perform a legal revision of the agreed text to come up with the final version of the Association Agreement and all its trade aspects. The Commission will then translate it into all official EU languages and submit the Association Agreement to EU Member States and the European Parliament for approval.

More information

Agreement in principle

MEMO

Questions and answers

Key facts about the agreement

Factsheet on agriculture

Factsheet on food safety

Factsheet on sustainable development

Exporter stories

Dedicated webpages

More on Mercosur

Economy

Bundesbank President Jens Weidmann resigns for personal reasons

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Bundesbank President Jens Weidmann announced in a statement that he is leaving the Bundesbank at the end of the year for personal reasons.

Weidmann has led the bank since May 2011: "I have come to the conclusion that more than 10 years is a good time to start a new chapter - for the Bundesbank, but also for me personally." 

Weidmann doesn’t hide his disagreements with his colleagues in the Governing Council of the European Central Bank, referring pointedly to the leadership of Christine Lagarde, though he describes the discussions as “open and constructive in the sometimes difficult discussions of recent years”.  He acknowledges that monetary policy had a stabilizing role during the pandemic, and the successful conclusion of the strategy discussion as an important milestone in European monetary policy. 

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Symmetry shouldn’t be one-sided

“A symmetrical, clearer inflation target has been agreed. Side effects and, in particular, financial stability risks should be given greater attention. A deliberate overshooting of the inflation rate was rejected [...] It will be crucial," said Weidmann, "not to look one-sidedly at deflation risks, but also not to lose sight of prospective inflation risks". 

He cautioned against a more broad approach that “gets caught up in fiscal policy or the financial markets: "This remains my firm personal conviction as well as the great importance of the independence of monetary policy."

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Weidmann has been sounding the alarm over inflation for some time, in September he said that while most inflation was due to transitory factors there were risks to the price outlook: “In my view, the risks are tilted to the upside right now,” he raised particular concerns that savings accumulated during the pandemic could lead to greater consumption than expected. “And if these transitory factors lead to higher inflation expectations and accelerated wage growth, the rate of inflation could rise perceptibly over the longer term as well.”

Lagarde expresses regret

In a statement President of the European Central Bank Christine Lagarde said: “I respect Jens Weidmann’s decision [...]but I also immensely regret it. Jens is a good personal friend on whose loyalty I could always count. As the Governing Council’s longest serving member he had unparalleled experience that he was always ready to share. 

“In the past two years we built a very strong and productive relationship based on our joint commitment to furthering European unity, fulfilling the ECB’s price stability mandate help the euro area economy through the unprecedented crisis cause by the coronavirus, and stabilizing the global economy shaken by the effects of the pandemic.”

What next?

The incoming traffic light coalition (Social Democrats, Greens and Liberals), who are currently finalizing their coalition agreement, will probably select the next candidate for Bundesbank President. The German federal president will then appoint the candidate who has an eight-year term.

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Digital technology

EU-US Trade and Technology Council: Commission launches consultation platform for stakeholder's involvement to shape transatlantic co-operation

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The Commission has launched an online consultation platform on the EU-US Trade and Technology Council (TTC), allowing stakeholders to share their views and provide common proposals on the work ahead.Following their first meeting in Pittsburgh last month, representatives of the European Union and the United States agreed on the importance of and commitment to consulting closely with diversestakeholders on both sides of the Atlantic on their co-ordinated approaches to key global technology, economic, and trade issues.

It is in this context that the Commission has set up a one-stop-shop on its online “Futurium” platform, to collect input from all interested parties relating to the TTC. Businesses, think tanks, labour, non-profit and environmental organisations, academics, and other parties that form the civil society at large are invited to contribute, as essential actors to successful EU-US cooperation. The platform is open to everyone after a simple registration. It allows interested parties to have their voice heard in the work of the ten specific TTC Working Groups. Via this website, they can not only feed in their views, but also receive important information and updates on the progress of the different working groups. More information is available in the press release here.

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European Youth Initiative

Commission kick-starts work to make 2022 the European Year of Youth

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Following the announcement made by President von der Leyen in her 2021 State of the Union address, the Commission has adopted its formal proposal to make 2022 the European Year of Youth. Europe needs the vision, engagement and participation of all young people to build a better future, that is greener, more inclusive and digital. With this proposal, Europe is striving to give young people more and better opportunities for the future. The Commission is also publishing its latest EU Youth Report, which provides an overview of the situation of young Europeans in terms of education, training, learning, employment, and civic and political participation.

With the European Year of Youth, the Commission intends, in co-operation with the European Parliament, member states, regional and local authorities, stakeholders and young people themselves: 

  • To honour and support the generation that has sacrificed the most during the pandemic, giving them new hopes, strength and confidence in the future by highlighting how the green and digital transitions offer renewed perspectives and opportunities;
  • to encourage all young people, especially those with fewer opportunities, from disadvantaged backgrounds, from rural or remote areas, or belonging to vulnerable groups, to become active citizens and actors of positive change;
  • to promote opportunities provided by EU policies for young people to support their personal, social and professional development. The European Year of Youth will go hand in hand with the successful implementation of NextGenerationEU in providing quality jobs, education and training opportunities, and;
  • to draw inspiration from the actions, vision and insights of young people to further strengthen and invigorate the common EU project, building upon the Conference on the Future of Europe.

The Commission is currently developing its programme of activities and all interested parties will be invited to submit their ideas and proposals. A dedicated survey on the Youth Portal will be launched in the coming days. Working together with other EU institutions, member states, civil society organisations and young people, the Commission will organize a number of activities throughout the year at European, national, regional and local level and consider new initiatives. The scope of activities will cover issues that mostly affect young people, following the priorities highlighted in the Youth Goals, such as equality and inclusion, sustainability, mental health and well-being, and quality employment. They will involve young people beyond the EU. The Commission calls on member states to appoint a national co-ordinator responsible for organising their participation in the European Year of Youth.

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The Commission's proposal will now be discussed by Parliament and Council, with the opinions of the European Economic and Social Committee and the Committee of the Regions taken into account. The events and activities are expected to start in January.

European Commission President Ursula von der Leyen said: “The pandemic has robbed young people of many opportunities - to meet and make new friends, to experience and explore new cultures. While we cannot give them that time back, we are proposing today to designate 2022 the European Year of Youth. From climate to social to digital, young people are at the heart of our policymaking and political priorities. We vow to listen to them, as we are doing in the Conference on the Future of Europe, and we want to work together to shape the future of the European Union. A Union that is stronger if it embraces the aspirations of our young people - grounded in values and bold in action.”

Promoting our European Way of Life Vice President Margaritis Schinas said: “Our Union is an area of freedom, values, opportunities and solidarity unique in the world. As we are emerging stronger together from the pandemic, the 2022 European Year of Youth will foster these principles for and with our younger generations across Europe. It is our duty to protect and empower them because their diversity, courage and boldness are essential for our future as Europeans.”

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Innovation, Research, Culture, Education and Youth Commissioner Mariya Gabriel said: “The European Year of Youth should bring a paradigm shift in how we include young people in policy and decision-making. The objectives of the Year are to listen, engage and promote concrete opportunities for youth. We also need to bridge the gap between generations. Today's young people are less interested in traditional forms of participation, but they are active in standing up for what they believe in, engaging in new ways. This Year wants to pay tribute and recognise the commitment of young people. With this Decision we start a co-creation process with all interested parties to contribute to the successful organisation of the Year.” 

Background

The European Year of Youth will go hand in hand with NextGenerationEU, which reopens perspectives for young people, including quality jobs and education and training opportunities for the Europe of the future, and supports young people's participation in society.

The Year of Youth will seek synergies and complementarity with other EU programmes targeting youth across the policy spectrum - from rural development programmes focussed on young farmers to research and innovation programmes, and from cohesion to climate change actions - including EU programmes with international outreach or of a transnational nature.

Besides, Erasmus+ and the European Solidarity Corps, with budgets of €28 billion and €1bn respectively for the current financial period, the EU's Youth Guarantee and Youth Employment Initiative are creating more opportunities for young people. While, in 2022 also, a new programme called ALMA will be launched to support cross-border professional mobility for disadvantaged young people.

The EU Youth Strategy 2019-2027 is the framework for EU youth policy co-operation. It supports youth participation in democratic life and aims to ensure that all young people take part in society. The EU Youth Dialogue is a central tool in these efforts.

Finally, the Conference on the Future of Europe, which will draw its conclusions also in 2022, ensures that the views and opinions of young people on the future of our Union are heard. One-third of participants in the European Citizens' Panels and of Panel representatives to the Conference Plenaries are also young people, while the president of the European Youth Forum also takes part in plenaries.

More information

EU Youth Report

European Youth Portal

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