Minister Tajani, after 25 years of negotiations, the EU-Mercosur agreement has been ratified. Mercosur is the largest free trade area in the world, encompassing 800 million people, including four countries traditionally linked to Italy.
It is the largest agreement ever negotiated by the European Union, a fact we can certainly define as historic for the European Union, for Italy, and for a very important part of the Latin American continent, to which we are deeply connected. Not only for commercial reasons, but also for political ones. It is rightly emphasized that the presence of large Italian communities in these countries is significant and is an additional asset we can play. The agreement is also the result of the work we have done in close collaboration with Prime Minister Giorgia Meloni – who spoke about the agreement at today’s press conference and reiterated that there have never been any ideological preclusions – and Minister Francesco Lollobrigida. We can reaffirm, as we have already done in the phases preceding the final adoption, that this is a success for Italy.
The agreement provides for the liberalization of tariff lines that account for over 90% of EU exports, including sectors with strong Italian commercial interests, such as automotive, industrial machinery, chemicals and pharmaceutical products. It also contains safeguard clauses and import quotas.
This was certainly a decisive factor. Thanks to the Government’s negotiating efforts, robust safeguard clauses and import quotas for sensitive products have been included (this is the first EU agreement to include the implementation of safeguards for products the liberalization of which is already limited by quotas). The agreement provides for the protection of many European Geographical Indications, including 57 Italian ones: the list is therefore long, but it encompasses all the excellences of our agri-food sector. In particular, additional measures will be implemented for the agricultural sector to address the widespread sensitivities of the agricultural supply chain. These include an EU regulation for the robust implementation of safeguards for agricultural products; the recognition of these provisions by Mercosur countries (which are waiting for the final text before expressing their views); the tightening of pesticide regulations for imported products (for which an impact assessment has already been started), and the strengthening of sanitary and phytosanitary checks announced by the European Commission.
What will change for companies, specifically?
First of all, something significant will change for the Italian system: by the end of the “running-in” period, Italy will earn €14 billion in additional exports. Indeed, the elimination of high Mercosur tariffs alone will enable EU exporters to save over €4 billion in customs duties per year. Furthermore – considering that Italy has a trade surplus with the Mercosur area, e.g. €7.7 billion in exports versus €6 billion in imports – exports will be facilitated by simpler and more streamlined customs procedures. In general, EU companies will be able to bid on public procurement contracts on equal terms with Mercosur companies. Furthermore, exclusive preferential access will be granted to some critical raw materials and some “green” products. The current tariffs are the following: car spare parts (35%), machinery (20%), chemicals (18%), and pharmaceuticals (14%).
The agreement can also have a political impact: it moves toward the elimination of tariffs at a time when President Trump’s US Administration is reintroducing tariffs both towards the EU and other major markets. This has implications not only for trade, but also for politics, considering the current geopolitical situation and US interventionism in the region.
Let us start with one fact: Italy and Europe have always supported free trade based on common rules. Expanding the EU’s network of free trade agreements is a strategic objective for our exports. We are working to diversify our outlet markets. Therefore, we are also looking at other areas such as Mexico and India. Since the beginning of my term of office, I have undertaken many missions to these countries, and business forums have been organized with thousands of Italian companies. These agreements are essential to ensuring Italy’s growth and prosperity. This is an important piece of the Government’s strategy to reach the target of €700 billion in exports (currently €623, ed.) by 2027, which adds to the recently launched operational reform of the Ministry of Foreign Affairs. Today, this ambitious goal is more achievable. It will enable our exports to increasingly be a key tool for the country’s economic growth and for ever more effective industrial and agricultural policies.
The agreement will reduce tariffs on critical raw materials and derived products, incentivizing Mercosur exports to the EU and reducing the Union’s import costs. One interpretation is that the agreement provides a way out of dependence on China, especially for critical minerals.
One key fact is that a secure and sustainable supply of critical raw materials is an essential element of the EU’s green and digital transitions. It will provide greater security and predictability in supply chains and ensure one of the most stringent sustainability standards in trade and investment in critical raw materials. As for China, it certainly remains an important partner and source of supply on which we intend to continue to rely. The events of recent years, however, remind us of the fact that economic security is best ensured by a diversification strategy. This is the reason why Latin America can play a fundamental role. Not just Mercosur, but also Chile, the Andean countries, and Central America. The EU has signed agreements with each of them that can help mitigate certain strategic dependencies.
Let us revert to the agricultural issue, since the agreement has been reached after a long time, primarily due to resistance from the agricultural sector, and some countries have not given their consent for this reason.
One result achieved is that the EU Commission has also announced – again in response to specific requests from Italy – additional measures to support European agriculture. These include additional funding for the sector; measures to align health, phytosanitary, and animal welfare standards on imported products, and strengthened customs controls to ensure compliance with the levels of consumer protection currently in force within the Single Market. Overall, what would be created is the most structured system of protection and safeguards ever put in place by the European Union in connection with a free trade agreement. Italy has been decisive in working with the Commission: I can say that no other trade agreement signed by the Union provides such a broad and structured level of protection to take into account agricultural sensitivities.
A key aspect for Italy was the guarantee of geographical indications to prevent Italian sounding.
I have always fought to protect Made in Italy products, in this case as in the fight against “Italian-sounding” products. This has been an ongoing commitment since the beginning of my term of office: as already mentioned, with this agreement we obtain the protection of 57 Italian Geographical Indications that currently lack any protection in those countries. This is another great achievement, which will enable us to defend and promote the excellence of our regions even more effectively.