The Trade Negotiations between the EU and Mercosur

Term Paper, 2002

33 Pages, Grade: 1,3 (A)





1. Introduction

2. Brief comparison between the European Union and Mercosur

3. EU-Mercosur Trade Relations
3.1. The Interregional Framework Cooperation Agreement
3.2. Negotiations on Trade Issues
3.3. Trade in goods
3.4. Trade in services

4. Conclusion and outlook




list of abbreviations

illustration not visible in this excerpt

list of figures and tables


Figure 1: Intra-Mercosur trade – Country share (1996) a) Exports b) Imports

Figure 2: Mercosur’s share in the EU-15’s trade (1995) a) Exports b) Imports

Figure 3: The EU-15’s share of Mercosur’s trade (1996) a) Exports b) Imports


Table 1: EU-Mercosur Association Negotiations since 2000

Table 2: EU-15 trade with Mercosur: 1998-2000 (€ million)

1. Introduction

During the last two decades, regional trading blocs and intra-regional trade have been gradually built up. Moves towards a liberalisation of international trade have led to the formation of large and increasingly regional trading blocks. Advantages deriving from international trade include political stability and overall growth. The three largest and best-established trading regions worldwide are NAFTA, EU and Asia-Pacific (ASEAN and APEC).[1]

“Because the EU’s own internal decision-making process is something of an international negotiation, it is very experienced in this type of interaction […] and particularly well-suited […] to dealing with other multinational organizations.”[2] Without being a member or contracting party, the European Union already participated in trade negotiations of GATT, OECD and UN.[3] It has also favoured Mercosur’s process of regional integration from its very conception in 1991, thereby striving for a stronger relationship between the two regional trading blocs.[4] Today Mercosur is the world’s fourth largest single market, after the EU, the USA and Japan. Having a mostly internal tariff-free zone between its members, it is now up to create an integrated external customs union.[5] Mercosur’s aim to become a real common market forms the main element in the creation of an association between both regions and should be completed by 1 January 2006.[6]

The essay on hand mainly concentrates on the bilateral negotiations on trade issues between the European Union and Mercosur.

2. Brief comparison between the European Union and Mercosur

The process of European integration was initiated after the 2nd World War with the creation of the European Coal and Steel Community (ECSC), which was joined by Belgium, Germany, France, Italy, Luxembourg and the Netherlands. In 1973, Denmark, Ireland and the United Kingdom joined the Community, followed by Greece in 1981, Spain and Portugal in 1986 and Finland, Austria and Sweden in 1995. Being based on the principles of law and democracy, the European Union has already achieved raised standards of living, the built-up of an internal market, the launch of the Euro and a strengthening of its position in the world. With today 15 member States, the EU is preparing for the accession of 13 southern and eastern European countries. Neither being a new State, nor replacing existing ones, the EU can be seen as a new form of international organisation, thereby constantly balancing national concerns and questions of joint interest.[7]

The Common Market of the South (Mercosur) is an economic integration project, that comprises four member States (Argentina, Brazil, Paraguay and Uruguay). Mercosur’s integration process has been inspired by the European experience. It was initiated in 1990, when Uruguay and Paraguay expressed their ambition to take part in the already existing bilateral process between Argentina and Brazil, aiming at an improvement of trade. On 26 March 1991, the Treaty of Asunción, an agreement among all four countries with the purpose to create a common market, was signed. Representing an international instrument with regional vocation, it remains open to the accession of further members. Since 1996, Bolivia and Chile are associate members.[8] Mercosur’s principal objectives are to accelerate the process of economic, scientific and technological development and to strengthen the member States’ internal position by improving living standards and conditions.[9]

Both the European Union and Mercosur are customs unions, which have initially been created on a bilateral agreement for decision-making (France-Germany, Argentina-Brazil). The two regional integration arrangements (RIAs) also have certain challenges in common. They both deal with the difficulties of their widening and deepening, the EU first through its enlargement towards Eastern Europe and second within its deepening into a monetary union, and Mercosur negotiating the joining of other South American countries and the American free trade area. Additionally, both blocs attempt to change their foreign policy in two ways: a reworked relation with the USA, and a co-ordinated and reinforced foreign policy on regional basis.

Nevertheless, there are considerable differences. First of all, the EU consists of developed countries (DCs), whereas Mercosur is formed by less developed countries (LDCs). Furthermore, the two RIAs display a significantly different degree of institutionalisation. Existing for half a century now, the EU is today the world’s most accomplished and institutionalised process of regional integration. In contrast, the relatively young Mercosur is only at a low level of institutionalisation and harmonisation of rules and still faces obstacles on its way to supranational political integration. As Mercosur fears a marginalisation, it confers high importance to its relations with other regional blocs, particularly DCs.[10]

3. EU-Mercosur Trade Relations

The EU-Mercosur relationship is based on the Interregional Framework Co-operation Agreement (IFCA), signed in Madrid in 1995. It covers political and institutional relations, matters of economy and trade, co-operation regarding integration as well as further issues of mutual interest, aiming at closer relations between the parties and their institutions. The political dialogue between the EU and Mercosur consolidates the existing relations by means of contacts, information exchanges, consultations and regular meetings.[11]

The following subchapters outline structure and contents of the trading negotiations between the EU and Mercosur.


[1] See Segal-Horn, Susan / Faulkner, David: The Dynamics of International Strategy, London 1999, pp. 49-55, 67 f.

[2] Lister, Marjorie: The European Union and the South: Relations with developing countries, London and New York 1997, p.27.

[3] See ibid.

[4] See The EU’s relations with Mercosur - Overview, in: Internet (
relations/mercosur/intro/), 19/03/02.

[5] See Segal-Horn, Susan / Faulkner, David: The Dynamics of International Strategy, London 1999, pp. 49-55, 67 f.

[6] See The EU’s relations with Mercosur - Overview, in: Internet (
relations/mercosur/intro/), 19/03/02.

[7] See Presse- und Informationsamt der Bundesregierung (Publisher): EUROPA 2002: Die Europäische Union und die Währungsunion, Berlin 1999, p. 8 f; European Documentation-Europe in ten points, in: Internet (, 25/03/02.

[8] See Embassy of Uruguay, Washington D.C.: MERCOSUR: Origins, in: Internet (
uruguay/econ/mercosur/merc-002.html), 27/03/02.

[9] See The EU’s relations with Mercosur – Relations between the EU and Mercosur, in: Internet (, 19/03/02.

[10] See Sanchez Bajo, Claudia: The European Union and Mercosur: A case of inter-regionalism, revised version, 1999, p. 2 ff.

[11] See The EU’s relations with Mercosur – Relations between the EU and Mercosur, in: Internet (, 19/03/02.

Excerpt out of 33 pages


The Trade Negotiations between the EU and Mercosur
University of Applied Sciences Mainz
European Integration
1,3 (A)
Catalog Number
ISBN (eBook)
ISBN (Book)
File size
485 KB
Trade, Negotiations, Mercosur, European, Integration
Quote paper
Catharina Lang (Author), 2002, The Trade Negotiations between the EU and Mercosur, Munich, GRIN Verlag,


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