Since the 6 December 2024 Free trade agreement Mercosur and European Union is about to become reality after the approval of European Council and Parliament

On 6 December 2024 the President of the European Commission Ursula von der Leyen and her counterparts from four Mercosur countries (Brazilian President Lula, Argentinian President Milei, Paraguayan President Peña, and Uruguayan President Lacalle Pou) ended the negotiations for a groundbreaking EU-Mercosur partnership agreement.

As it is stated by the EU Parliament: “ The proposed EU-Mercosur agreement is composed of a political and cooperation pillar, and a trade pillar. The end of negotiations constitutes the first step in the process towards conclusion of the agreement. The official documents will be published online over the next days”.

After the above mentioned agreement, the parties have to:

• Check and translation of the text in all the EU EU languages;
• Submission of the text to Council and Parliament.

The protocol of origin of the draft provides that:

Accounting segregation: “1. Where fungible originating and non-originating materials are used in the manufacture of a product, those materials shall be physically segregated, according to their origin, during storage.

2. However, physical segregation of fungible originating and non-originating materials is not needed in the manufacture of a product, when the origin of the products is determined pursuant to the so-called “accounting segregation” method for managing stocks.
3. This method is recorded and applied in accordance with the generally accepted accounting principles applicable in the Party where the product is manufactured.
4. The accounting segregation method may be used only if it can be ensured that, at any time, no more products receive originating status than would be the case if the materials had been physically segregated.
5. A Party may require that the application of the accounting segregation method referred to in paragraph 2 is subject to a prior authorisation by their customs authorities. The customs authorities may grant the authorisation subject to any conditions deemed appropriate and, in that case, they shall monitor the use of the authorisation and may withdraw it at any time whenever the beneficiary of the authorization makes improper use of it in any manner or fails to fulfil any of the other conditions laid down in this Protocol”.

Neutral elements for origin calculation: “In order to determine whether a product originates, it shall not be necessary to determine the origin of the following which might be used in its manufacture:

(a) energy and fuel;

(b) plant and equipment;

(c) machines and tools;

(d) goods which do not enter and which are not intended to enter into the final composition of the product”.

Territoriality principle: “1. The conditions set out in this Protocol relating to the acquisition of originating status shall be fulfilled without interruption in the European Union or Mercosur” and again “ 2. If originating goods exported from the European Union or Mercosur to another country return, they must be considered as non-originating, unless it can be demonstrated to the satisfaction of the customs authorities that:

(a) the goods returned are the same as those exported; and

(b) they have not undergone any operation beyond that necessary to preserve them in good condition while in that country or while being exported”.

Statement of origin: “ 3. A statement on origin may be made out if the products concerned can be considered as products originating in the European Union or Mercosur and fulfil the other requirements of this Protocol” with REX number for European economic operators?

According to the article 18 of the draft we are checking, the statement of origin “ […] shall be valid for 12 months from the date it was made out by the exporter, and shall be submitted within the said period to the customs authorities of the Party of import”.

Moreover, the article 22 lays down that: “ The exporter making out a statement on origin shall keep for at least three years a copy of this statement on origin”. Therefore, it is possible to say that the economic operator has to be ready to be audited and should store the data on which the statement of origin is based. Indeed, article 25 of the protocol of origin who is part of “Trade part of the EU-Mercosur Association Agreement”   lays down that: “ The Party of export shall provide to the customs authorities or competent governmental authorities of the Party of import requesting the verification, the following information:

(i) the results of the verification;

(ii) the description of the product subject to verification and the tariff classification relevant to the application of the rule of origin;

(iii) a description and explanation of the production sufficient to support the rationale concerning the originating status of the product;

(iv) information on the manner in which the verification was conducted; and (v) where appropriate, supporting documentation”.

About the sustainable development the free trade agreement (UE-Mercosur) is based on the following pillars:

• Strong and legally binding environment and climate commitments;
• Implementing the Paris Agreement;
• Protection of forests;
• Responsible supply chains;
• Protecting human rights, including labour rights;
• Enforcement of the Trade and Sustainable Development Chapter.

For what is concerning the agricolture, the European Commission declared that: “ The deal will have limited impact on the EU beef market and will not generate further deforestation in Mercosur”.

Finally, for the critical raw material, the European Commission informed that “A secure and sustainable supply of critical raw materials is at the core of the green and digital transitions. It is vital for increased EU security and defence capabilities. While the European Critical Raw Materials Act aims at ensuring a diverse, secure, and sustainable supply of critical raw materials for the EU’s industry, still the EU is not self-sufficient in the supply of these materials and will continue to rely on imports”.