On 28 June 2019, the European Union (EU) and MERCOSUR Member States (Argentina, Brazil, Paraguay and Uruguay) concluded negotiations on a bi-regional trade agreement (Agreement). The Agreement impacts a combined population of more than 780 million people and is the EU’s largest trade agreement to date.
This far-reaching Agreement provides for progressive tariff cuts on imported goods and services. Key provisions concern the facilitation of e-commerce, company access to government procurement contracts, sustainable development, and the protection of intellectual property rights. Notably, the Agreement explicitly upholds the ‘precautionary principle’, giving public authorities the right to protect human health and the environment, even when scientific evidence is inconclusive. The Agreement does not include any investment chapter or investment dispute settlement provisions, and thus has no impact on existing bilateral investment treaties between EU and MERCOSUR Member States. This contrasts with the recent EU-Canada Comprehensive Economic and Trade Agreement, which provides for an investment court to resolve investor-State disputes.
The Agreement’s dispute settlement chapter covers the interpretation or application of trade provisions and breaches of Party obligations. Specifically, if consultations between the concerned Parties fail, the complaining Party can refer the dispute to a three-member arbitration panel, whose decision is final and binding. Hearings are open to the public and interested persons can submit amicus curiae briefs. If the infringing Party fails to comply with the panel’s decision, the complaining Party can put in place countermeasures. Parties may also resort to mediation, even in parallel with a panel proceeding. The Agreement’s trade and sustainable development chapter also has specific dispute resolution procedures. Under this mechanism, a non-compliance complaint is first considered in formal consultations. If those consultations are unsuccessful, a panel of experts can be requested to examine the matter and produce a report and recommendations, which are to be made public.
For the Agreement to enter into force, it will require ratification by MERCOSUR Member Parliaments, the EU, and EU Member States.