spiritsNEWS May 2021

EU-Mercosur: a real opportunity for EU exporters

On 30 April 2021, BusinessEurope, the Confederation of Portuguese Business (CIP) and the Brazilian National Confederation of Industry (CNI) organised an event to show the strong commitment from European and Brazilian businesses to sustainability and to the EU-Mercosur Agreement. The event was an opportunity to reaffirm the importance of the EU-Mercosur Agreement to promote sustainable development goals in the two regions and globally, to create more opportunities for economic growth in light of the COVID-19 crisis, and to reignite strong historic and economic ties. The spirits sector fully shares these views and supports the EU-Mercosur Agreement as a key catalyst of sustainability and growth in the two regions. 

With a population of 266.5 million inhabitants, Mercosur countries offer great growth potential for EU spirits. The biggest market for spirits in this region is Brazil. Yet, today, imported spirits only represent 7.1%  of spirits consumption in Brazil. Once ratified, the EU-Mercosur FTA will bring down barriers on both sides and open the Mercosur market to EU high-quality spirits, through:

  • Tariff liberalisation, with a full import tariff elimination for all EU spirits over a period of 4 years from entry into force of the agreement. This will represent a significant achievement from the current 20% import tariff faced by most EU spirits today.
  • A wine & spirits annex, with trade facilitation measures for wine & spirits through labelling provisions and greater protection against counterfeiting by preventing the removal of lot codes.
  • Protection of spirits Geographical Indications (GIs): Leading spirits’ GIs (such as Irish whiskey, Swedish vodka, Polish vodka, Cognac) will be recognised & protected and the use of pre-existing trademarks with GI names will be better controlled.
  • Level playing field with local spirits: The agreement will ensure that domestic & imported products are treated fairly and equally, in line with GATT Article III.
  • Provisions for the use of regional hubs: The rules of origin agreement will allow the use of regional hubs by EU exporters.

Against the backdrop of the global pandemic and ongoing economic crisis, trade will be a key driver of recovery by opening up new markets and opportunities for EU companies, large and small, allowing them to create jobs and growth in the process. This is particularly the case for our sector, as 2/3 of our exports involve products protected by geographical indications, which are a guarantee of local growth & job creation, particularly in rural areas.

Most importantly, the agreement with Mercosur will also be a driver of sustainability, by binding both sides to the Paris Agreement, promoting the implementation of several environmental commitments, and offering a unique platform to effectively address sustainability challenges. Commitments on workers' rights and environmental protection will be enforceable through a dispute settlement mechanism which foresees a role for civil society organisations and calls on the expertise of international bodies, whose reports and recommendations must be made public.

As a responsible and environmentally-conscious sector, we stand ready to continue and lead efforts to increase sustainable development and reduce our waste & carbon footprint, in line with SDG objective 12 (Responsible consumption & Production). Our members who have a presence in Brazil are already involved in a number of projects, on recycling, waste collection, and reduction of water consumption, to name but a few. Creating new market opportunities for EU spirits producers and other EU sectors will help increase and multiply these efforts, by allowing business to drive a sustainable and long-term transformation on the ground.

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