• Talks over an EU-Mercosur FTA have been ongoing for almost two decades.
  • Deal is said to be near conclusion, with closure expected before the end of 2017.
  • If concluded, it would be one of the EU bloc's biggest.

Groups representing European and Brazilian textile and apparel firms have welcomed negotiations for a EU-Mercosur Free Trade Agreement (FTA) that could be concluded before the close of 2017.

The European Apparel and Textile Confederation (Euratex) and the Brazilian textile industry association ABIT say they have maintained strong links for a number of years and have always been supportive of the conclusion of an FTA.

"The textile and clothing industry is a vivid and global sector in which we believe Europe and Mercosur countries have a key role to play. Our focus is on high-quality products manufactured in a sustainable manner under high standards, be it from an environmental, labour and social point of view," they said in a joint statement.

"Over the last months, we have intensified our talks and we have jointly worked on a wide range of topics related to textile and clothing trade namely regulatory cooperation, customs procedures, technical barriers to trade, sustainability requirements etc. Tariffs dismantling and rules of origin have also been very much at the centre of thorough and sometimes hard talks."

Talks over a trade agreement with Mercosur are part of overall negotiations by the EU for a bi-regional Association Agreement between the two, which also covers a political and a cooperation pillar.

If concluded, it would be one of the EU bloc's biggest, with two-way trade in goods valued at EUR85bn (US$100.2m) last year. It also has the potential to transform the relatively closed, high-tariff economies of Brazil and Argentina, the two largest members of Mercosur, which also includes Uruguay and Paraguay. 

Discussions over a potential deal began almost two decades ago, but reports in the last week suggest there is a realistic chance of an agreement being concluded before 2018. A Commission official told Bloomberg that work is ongoing to prepare for a possible exchange of offers, and member states are being consulted.

In order for the deal to benefit both parties and increase trade and investment in the textile and apparel industries of both sides, Euratex and ABIT say they have made efforts to build together a balanced rules of origin, taking into consideration the structure of their industries.

As such, the two groups say they are happy to "share a suggestion from the private sector to both governments with our common views on the Product Specific Rules and Tariff Dismantling to be enshrined in the EU-Mercosur FTA."

They add: "We strongly hope that the EU-Mercosur Agreement will be concluded as soon as possible, and we call on the negotiators to pay due attention to our recommendations."

Speaking in Buenos Aires last month, the European Commission's vice president for Jobs, Growth, Investment and Competitiveness, Jyrki Katainen, said that while it has taken a long time to negotiate, there has been "tremendous progress" made in the last year and a half on the deal.

"We expect that the Association agreement will create strong ties between the EU and countries of Mercosur. It will also reinforce the internal cohesion of the Mercosur group, make it more effective as a functional market and it will enhance this region.

"An Association Agreement with the EU will anchor sound, rules-based principles in an international treaty, providing legal certainty for investors and innovators. It will also signal a degree of openness, that is the hallmark of successful modern economies. By opening up to each other, our companies will pay lower prices for inputs and get new clients. We will both be able to produce more for less by specialising in what we do best and exploiting economies of scale in larger markets. 

"When we are entering the final stage of negotiations, there are only difficult issues left. That is why we need both strong political backing and also strong support from other stakeholders. If we are successful, we can enjoy the fruits, in terms of employment, in terms of growing tax revenues, in terms of growing companies and also in terms of closer, stronger political relationship between Europe and Mercosur."