Mechanical engineering companies hope for free trade with South America

Trade with South America is in urgent need of stimulation. VDMA is therefore advocating the start of new negotiations on a free trade agreement between the EU and the Mercosur association of states in the next few weeks.

Mercosur includes Brazil, Argentina, Paraguay and Uruguay – the fifth member, Venezuela, will not be involved in the talks. VDMA has a very positive view of a trade agreement with Mercosur, as tariffs and bureaucratic hurdles currently make exporting to South American states difficult.

“Free trade between Europe and the more than 260 million people in Mercosur would benefit both sides. Despite the economic problems it is currently facing, South America is an interesting market for German mechanical engineering companies. By the same token, the Mercosur states would benefit from improved access to modern production technology,” said Ulrich Ackermann, Head of VDMA’s Foreign Trade department. “The fresh round of talks between the EU and Mercosur offer an opportunity not only for tariff reduction, but also for stronger competition in the region. From the point of view of mechanical engineering, it would take the most comprehensive agreement possible to tap the full potential of trade with South America.”

Technical regulations, especially for mechanical engineering, which are not part of the negotiations, require that the bilateral exchange with the Mercosur countries be maintained. If it is not, progress made concerning tariffs could easily be negated by increased costs for adaptation to local standards. The EU and Mercosur also conducted talks in 1999 to 2004 and 2010 to 2012, but these were ultimately unsuccessful.

The export volume of German mechanical engineering companies to Mercosur member Brazil was almost EUR 2.1 billion last year, and an impressive EUR 3 billion in the record year 2011. The strongest industries in this were construction equipment and building material machines, conveyor technology and drive technology. Exports to Argentina in 2015 totaled EUR 545 million. German companies delivered machinery and plants worth almost EUR 3 billion to all Mercosur countries in 2015.


Eike Radszuhn
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