The European Union’s trade agreement with the Mercosur countries (Brazil, Argentina, Paraguay, Uruguay and Bolivia) has recently been the subject of intense discussions not only in the EU Member States but also in Slovakia. Opinions on it vary, and voices are also being heard about the threat to farmers. The safeguard mechanisms included in the agreement will help to allay these fears. However, it is important to see in the agreement the great trade opportunities it will bring to Slovak companies, from expanding their export activities to increasing their competitiveness. This is in line with the recommendations of the Draghi report on the competitiveness of the European economy, and I was reassured by the Slovak Prime Minister’s official visit to Brazil last week.
For Slovak companies, the agreement represents a new potential market of almost 300 million consumers. One of its biggest advantages is the removal of tariff barriers. Up to 91 per cent of EU exports to Mercosur will be affected by the phasing out of tariffs. For Slovak products, this means the possibility of cheaper access to these markets. The Slovak automotive industry has the greatest potential and could benefit from the gradual elimination of high tariffs for most products. These are currently as high as 35 per cent in Mercosur. With car exports worth 204 million euros, Slovakia could thus gain a significant competitive edge. In addition, the agreement will eliminate most tariffs on machinery and mechanical equipment, a sector in which exports are valued at €67.8 million. In the case of electrical machinery, where Slovak exports are valued at €35.4 million, tariffs will even be eliminated altogether.
In the optical, medical-surgical, measuring and photographic instruments sectors, there will be zero tariffs across the board, and in the plastics sector, tariffs will be eliminated on most products. Slovak products with an export potential of tens of millions of euros can thus benefit from these changes. The agreement also has potential for Slovak farmers. Mercosur is a market with a high demand for quality European agri-products. Slovakia can therefore take advantage of the opportunities and export, for example, dairy products, chocolate, biscuits or soft drinks.
From an economic point of view, the EU-Mercosur agreement has significant potential for Slovakia. Our businesses will benefit from the removal of tariff barriers, which will enable them to compete more effectively on Latin American markets, helping to bring new investment, production capacity and greater demand for Slovak products.
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Photo source: Peter Majer, Hospodárske noviny