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EU provisionally applies Mercosur deal, unlocking tariff cuts early

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The European Union has decided to provisionally apply the free trade agreement with the Mercosur countries even before it formally enters into force. This means European companies can benefit from tariff breaks sooner, while carriers and exporters will gain new trade opportunities.

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A decision by European Commission President Ursula von der Leyen gives companies from the EU, as well as from Uruguay and Argentina, access to preferential customs rules, even if the agreement’s full entry into force is delayed by an assessment by the Court of Justice of the European Union.Ratification in Uruguay and Argentina has paved the way for early application of the deal, allowing businesses to start benefiting from it now.

Provisional application accelerates benefits

The provisional implementation of the agreement gives European companies quick access to tariff preferences and other trade concessions. The agreement’s formal entry into force may be delayed for months or longer due to European Parliament requirements, which in January referred it for review by the Court of Justice of the EU.So far, advisory opinion procedures at the CJEU have taken between 16 and 26 months, which in practice means full implementation could come much later.

Long negotiations and controversy in the EU

The agreement was signed in Paraguay after more than 25 years of negotiations, despite opposition from some member states, including France and Poland.The deal covers a market of around 720 million people, opening up broad opportunities for trade in goods and services.

Opportunities for the automotive, machinery and pharmaceutical industries

The removal of duties and trade barriers offers particular benefits for the automotive sector, mechanical engineering and the pharmaceutical industry. For example, the current duty on car imports into Mercosur countries is 35%. Provisional application of the agreement allows European companies to save billions of euros in duties and expand exports to Argentina, Brazil, Uruguay and Paraguay.

Poland still considering a complaint

Agriculture Minister Stefan Krajewski stressed that Poland is still analysing the possibility of filing a complaint with the Court of Justice of the EU, although the European Parliament has already referred the agreement for review. According to the Ministry of Foreign Affairs, Poland has 60 days to file a complaint from the moment the agreement is published, and legal consultations on the matter are ongoing.

Provisional application of the Mercosur agreement means European companies can already take advantage of new trade opportunities, even though formal ratification by the European Parliament will take time. This is a chance for faster export growth and better use of the opening markets in South America.

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