Policy paper - EU Mercosur free-trade agreement

In 2024, around one-third of all vehicles manufactured in the EU were exported globally, contributing nearly €100 billion annually to the EU's trade surplus. This European automotive industry success wouldn't be without free trade. However, the sector now faces mounting challenges, including escalating costs, intensifying global competition, and growing supply chain vulnerabilities that threaten EU's position as a major automotive actor.

The Mercosur region, home to 270 million consumers and a rising demand for European vehicles, offers a remarkable trade opportunity. The EU-Mercosur Free Trade Agreement would remove tariffs of up to 35% on vehicle imports, giving European manufacturers a crucial advantage over competitors. The European Commission estimates that this could lead to a threefold increase in automotive exports to the region by 2040. Beyond trade, the agreement would also enhance the EU's access to essential raw materials and public procurement markets in Mercosur countries, reinforcing economic resilience amid geopolitical uncertainty.

Yet, these benefits rely on timely ratification. The EU must act decisively to approve the trade provisions and avoid political delays. While some critics call for stricter environmental measures, the agreement already includes some of the most ambitious sustainability commitments ever negotiated, fully aligned with the Paris Agreement and tackling deforestation.

In this policy paper, the European Automobile Manufacturers' Association (ACEA) urges the EU to ratify the EU-Mercosur free trade agreement without delay, arguing that:

1. Free trade is an essential part of the EU automotive industry competitiveness
2. Mercosur region has huge potential as an export market
3. EU-Mercosur agreement is essential as part of the European economic security strategy
4. The agreement contains robust sustainability provisions

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