The EU-Mercosur agreement, is key to preserving competitiveness in the European market, according to the consortium, which sent a letter to the Presidents of the European Parliament, European Council and European Commission on 4 July.

The organisations, which range from those focused on clothing and footwear such as EURATEX and CEC to those focused on automobile and construction manufacturing, explain the agreement’s ratification would provide an opportunity to diversify export markets and suppliers as well as keep existing supply chains operational.

The letter was sent less than a month after the EU, Brazil and Argentinian apparel suppliers urged their respective presidents to finalise the EU-Mercosur Free Trade Agreement (FTA) by the end of this year with sourcing expert Dr Sheng Lu telling Just Style at the time Latin America is a strategically important sourcing region for the EU.

The EU-Mercosur agreement was reached in June 2019 after two decades of negotiations. At that time, it was said to be the largest and most ambitious trade agreement ever negotiated by both sides, providing regulatory certainty for both trade in goods and services.

The consortium’s letter explains that once ratified the EU-Mercosur agreement will offer Europe “a unique and timely opportunity to seize a first-mover advantage in the wider Latin American market.”

The consortium believes the EU must grasp the momentum and finalise the deal with the Mercosur countries.

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The letter reads: “As significant barriers to trade with the Latin America region are still in place, the ratification of the EU-Mercosur agreement would help Europe remain a key player and open up trade opportunities with both the Mercosur countries and with Latin America at large.”

It continues: “The war in Ukraine and its subsequent strain on our supply chain has demonstrated the importance of diversifying our portfolio of export markets and of suppliers of critical industrial inputs.

“The EU-Mercosur agreement will help ensure that our supply chains remain operational in an increasingly volatile and ambiguous world marked by several crises, which span from strategic dependencies on the supply of critical raw materials, to concerns for feedstock, as well as to demographic challenges. In this context, finalising the adoption of the EU-Mercosur agreement is absolutely vital.”

Concrete tools to address global challenges

The letter explains the agreement’s ratification would provide concrete tools to engage with Mercosur countries on global challenges, such as climate change, forest preservation, and labour rights.

It will also enhance regulatory dialogue on specific topics such as animal welfare and traceability, antimicrobial resistance, and product standards, where the consortium says stronger cooperation is needed.

The consortium concludes: “The EU-Mercosur agreement is also a key building block in the EU’s broader strategy with Latin America and the Caribbean, as presented in the Joint Communication of the High Representative and the European Commission published on 7 June 2023. The EU is already the largest investor in the
region and bilateral trade has increased by 40% since 2018 thanks to FTAs already in force in the area. Ratifying the EU-Mercosur agreement would further boost these relations.”

Dr Sheng Lu, associate professor in the Department of Fashion and Apparel Studies at the University of Delaware told Just Style last month (June 2023) EU fashion brands and retailers are derisking their supply chains in response to the current business environment so it makes sense for them to be actively seeking new sourcing opportunities beyond Asia.