Online Research Documents General documents relating to regional trade agreements carry the WT/REG document code. As part of the Doha Agenda trade negotiations mandate, they use TN/RL/O (additional values needed). These links open a new window: Allow a moment for the results to appear. 38 With regard to the overall effects of the two free trade agreements, they have a considerable sectoral impact, with significant implications for countries` industrial structure and labour markets. Chart 1 shows the impact of the benchmark index by macro sector on export growth, and Chart 2 shows the composition of the increase in exports. A closer look at sector analysis shows that, in all three scenarios, the light manufacturing sector recorded the strongest export growth in macroeconomic sectors. It increases by 15% under the Mercosur-EU DEA scenario and by about 7% in the context of free trade training. 3 Trade negotiations between Mercosur and the EU began with the Inter-Regional Cooperation Framework Agreement signed in December 1995, which aimed to strengthen economic cooperation, strengthen political dialogue and prepare for the bilateral liberalisation process. At the Rio de Janeiro summit in June 1999, the two sides agreed to begin negotiations for the creation of a free trade agreement through a gradual and reciprocal process.
Although both blocs recognise the importance of creating a free trade agreement, one of the most difficult challenges lies in the agricultural negotiations, where Mercosur is clearly competitive, while the EU maintains a protectionist CAP (common agricultural policy). This issue is increasingly dominating the agenda of trade negotiations and the opportunities for deepening and clearing trade relations between the two blocs will depend to a large extent on progress in this area. An important aspect of Mercosur`s relationship with the EU is that, given the growing trade dominance in the United States and the ongoing hemispheric negotiations, Mercosur sees the EU as a counterweight to the US, particularly under the free trade agreement. For the EU, Mercosur is an important supraregional trading partner; It absorbs about 50% of its exports to Latin America and accounts for half of Latin America`s total exports to the EU market. Mercosur is a traditional stronghold in America and is now an increasingly important partner in blocking American domination and restoring its lost share in Latin America by strengthening trade relations and encouraging trade opportunities. Given that the EU and the United States are competitors in the South American market, this is a very important parallel program of the free trade agreement. 6In the simulations, it is considered that all barriers to trade in the model have been completely eliminated, including for agricultural products in developed countries. However, it is likely that a final agreement could exclude sensitive agricultural products, particularly in the case of the EU`s E FREI trade agreement; This is why our simulation results must be carefully interpreted and conditioned to full liberalisation in all sectors. The results show the enormous commercial creation generated by the two agreements, although we also see some trade branch of non-conventional partners when tariffs are abolished. While free trade with the EU leads to stronger growth in trade and GDP for Mercosur, hemispheric integration favours capital and technology-intensive industrial exports more than integration into the EU market.
In relative terms, exports to Latin American partners under the ESTV agreement are more focused on industrial exports than on exports to the U.S. market (particularly for Brazil).