Energy traders could benefit from new EU-Mercosur trade deal

European Union (EU) importers of liquid fuels should benefit from a trade deal struck between the EU and the Mercosur bloc of Brazil, Argentina, Uruguay and Paraguay, writes Keith Nuthall. The agreement will phase out all EU duties charged on industrial goods over 10 years. In return, the Mercosur countries will phase out duties on EU exports of industrial goods accounting for 91% of EU industrial products sent to these countries.

The full text has yet to be released, so it is not clear which oil and gas lines might be exempt from this Mercosur commitment, but a European Commission note stressed the agreement would offer ‘EU and Mercosur industries easier access to high-quality raw materials and parts…’

EU duties on Mercosur exports that may disappear include some 3.5% duties on Brazil liquid fuels. Brazilian petroleum oil and fuels, including biodiesel mixes, exported to the EU were worth $2.2bn in 2018. The EU exported $59.5mn worth of LNG in 2018, with $5.9mn worth of petroleum oil and related fuels going to Brazil in 2017. It also exported $20.8mn worth of LNG to Argentina in 2018, according to international trade data. Argentina exported $86mn of petroleum oil and related fuels to the EU in 2018 and $22.8mn of liquefied propane.

The deal also includes commitments to rationalise import and licensing procedures, using international standards to harmonise technical rules and liberalising government procurement.