The MERCOSUR-European Union Agreement: A new opportunity for facilitating international trade?

“Inefficient trade procedures increase the cost of trade and create a gap between the price the producer receives for the good and the price the consumer pays; this represents a pure loss (“efficiency loss”) similar to the part of the iceberg that melts as it drifts through the ocean.” 1 WTO. "World Trade Report 2015-C. The theory and measurement of trade facilitation."

Introduction

After more than two decades of negotiations, the MERCOSUR–European Union Agreement represents one of the most significant milestones in contemporary international trade. Beyond tariff reductions, the treaty incorporates commitments regarding regulatory cooperation, customs harmonization, and trade facilitation—aspects that reflect the new dynamics of international economic integration.

Entering into provisional application this month, this Agreement is incorporated into our legal system in Uruguay through Law 20.462 of 26/02/2026 2 .

This Agreement establishes one of the most important free trade zones, in that it brings together more than 750 million people and represents almost 20% of the world's GDP, benefits that would constitute an invaluable opportunity for our country from an economic point of view.

It is essential that the countries of the bloc maximize the opportunities arising from the Agreement while simultaneously addressing the challenges its implementation entails. This will require investments aimed at creating more efficient environments for business development. In this context, it will be necessary to accelerate modernization and adaptation processes so that companies can achieve adequate levels of competitiveness and strengthen their participation in international trade.

A trade liberalization agreement only?

I understand that's not the case. As its objectives clearly state, it's a modern trade agreement, therefore, we'll have to get used to the fact that it will begin to promote, protect, harmonize, and monitor trade in order to achieve its proposed goals. Furthermore, it provides a comprehensive framework for relations between the two blocs, shaping strategies and regulations, with trade facilitation being a fundamental pillar.

So why dedicate an entire chapter to trade facilitation when all signatory countries are WTO members and have incorporated the innovations of the Bali TFA into their legal systems? From a technical perspective, it can be argued that modern trade agreements encompass aspects of regulatory deepening, operational harmonization, logistical integration between blocs, and customs cooperation on specific issues.

The agreement reflects the trends of what is known as "new generation regionalism". 3 where economic integration transcends tariff reduction to incorporate regulatory, customs, and institutional disciplines.

In this Chapter IV, “Customs and Trade Facilitation,” the aim is to deepen cooperation mechanisms and establish bilateral commitments between both blocs. Why is this? First, because it is strategic, and second, because the real obstacle to trade is no longer tariffs, but rather regulatory differences, traceability, administrative costs, and other factors.

Although all signatory countries already apply these multilateral disciplines, it is consistent for the Agreement to expressly reaffirm them, seeking to consolidate a comprehensive framework for cooperation and regulatory convergence that strengthens their effective implementation. In this regard, I will delve into several aspects of this Agreement, which are based on the premises shared by the WCO to combat fraud, protect health and safety, and promote legitimate trade. 4

Customs Cooperation

Cooperation is essential to achieving the Agreement's objectives. The exchange of information on customs legislation, particularly regarding customs procedures, is fundamental for harmonization and simplification, coordination among border agencies, the free movement of goods, fostering relations with the business community, and strengthening supply chain security measures.

In this sense, the exchange of information in the customs field constitutes a key aspect since the increase in trade flow that already exists with the EU.

This aspect, together with the commitment to mutual administrative assistance in customs matters, will contribute to building trust between customs agencies and accelerating trade.

Perishable goods

In accordance with Article 7.9 of the TFA, this type of merchandise is specifically emphasized given its high sensitivity for both blocs in terms of their trade, clarifying the following in point 2:

"Each party will give appropriate priority to perishable goods when scheduling and conducting any necessary examinations."For this purpose, whenever feasible, shipments should be dispatched outside the working hours of customs authorities and other competent authorities, and also allow these shipments to be dispatched at the premises of the economic operator, in order to provide greater predictability and regulatory transparency.

Authorized Economic Operators

From art. 4.8 onwards, Mutual Recognition Agreements (the famous ARMs) of AEOs are permitted, a measure that constitutes a benefit of very high value for companies that comply with all the requirements that the standard demands.

It will also be necessary to coordinate between customs authorities and other border agencies regarding the development of their AEO programs, in order to harmonize requirements, eliminate duplication, and improve access to the “advantages related to controls". 5

The importance of these certifications lies not only in streamlining customs procedures, leading to a significant reduction in logistics costs, but also in building mutual trust through the standardization of compliance requirements for Authorized Economic Operators (AEOs). These are key factors that influence the competitiveness of products sold abroad.

In the case of MERCOSUR, it has had a Mutual Recognition Agreement (MRA) signed for its OAS programs since 2019. 6 and has established agreements with other countries in the region and other extra-regional countries such as the recent one signed with the Pacific Alliance 7 .

Customs Valuation

While all signatory countries apply the GATT Valuation Agreement, reinforcing the idea that, in matters of customs valuation applicable to trade between the parties, the conditions established therein will apply, is about integrating the provisions from a technical perspective, emphasizing “multilateralism” as a common standard, avoiding arbitrary practices or deviations as mentioned in the Valuation Agreement itself: “Arbitrary or fictitious values”.

The aim is also to provide legal certainty to foreign trade operators, since customs value directly impacts costs: tariffs, royalties, value adjustments, etc. In keeping with the overall agreement, the inclusion of this article seeks to harmonize regulations, fostering economic integration with a solid foundation; therefore, it is not surprising that an entire article is dedicated to clarifying it.8

Post-Dispatch Audit

It is consistent to mention the central pillar of the modern control model that promotes trade facilitation.

Conceptually aligned with Article 7.5 of the AFC, this Article 4.13 aims to embody in these relations between blocs the idea that, in order to expedite the release of goods and improve competitiveness, the mechanism that fulfills this is the Post-Dispatch Audit, or as it is known in English, APD or PCA.

Post-clearance audits must be conducted based on risk management criteria, simultaneously ensuring transparency and legal certainty. In this regard, the Agreement emphasizes the importance of properly notifying those being audited of the results of the actions taken by the customs authority, as well as any findings, ensuring they are fully aware of their rights and obligations. These practices are essential for consolidating modern control models that are compatible with facilitating international trade.

In summary, the Agreement explains how it uses all the measures inherent to facilitation to achieve the objectives of developing international trade between the blocs in a way that contributes to sustainable economic, social and environmental development.

To conclude, this article mentions in point 5 "Where feasible, the parties will use the results of the post-clearance audit for the application of risk management," emphasizing the best practices championed by OMA and with the AFC.

Trade facilitation needs this control mechanism because without it, there is no agility in border controls, costs would not be reduced, and the constant flow of trade would be affected, missing the opportunities that the APD offers: guarantee to this system, protection of revenue without affecting competitiveness, enabling a balance between facilitating legitimate trade and maintaining the capacity to audit efficiently and effectively.

Conclusion

The Agreement presents a potential opportunity to further facilitate trade, to the extent that the States Parties can implement the regulatory and customs commitments and improve the various levels of digitalization.

The differences in customs capacities to harmonize their regulations in order to comply with what took so many years to build, as well as the challenge of thinking as a bloc, constitute the most notable challenges in these early days of implementation. Ultimately, the challenge for the Member States will not only be to implement a trade agreement, but also to build institutional capacities that will allow them to transform trade facilitation into a true tool for economic integration and international competitiveness.

---

1. The “Iceberg” model (or iceberg transport costs) was introduced by Paul Samuelson in 1954 in the article “The transfer problem and transport costs, II: Analysis of effects of trade impediments,” published in The Economic Journal (Vol. 64, No. 254). The model assumes that a fraction of the goods “melts” (is lost) during transport, so the total cost is proportional to the value or volume of the product, just as with ice. The World Trade Organization, in its 2015 report on “Theory and Measurement of Trade Facilitation,” uses it to explain the effect of costs on international trade in goods. The model suggests that if countries improved their trade procedures, costs could be reduced. This trade facilitation would improve the real terms of trade between both countries, as it simultaneously reduces the price paid by local consumers for imports and increases the price received by foreign exporters. This improves the real terms of trade in both countries, generating a a beneficial scenario for their economies.

2.https://www.gub.uy/ministerio-economia-finanzas/politicas-y-gestion/acuerdo-mercosur-union-europea

3. The term "new generation regionalism" (or "new regionalism") refers to
to the model of economic and political integration that emerged after the Cold War.
Unlike the protectionist model of the 20th century, this one is based on "regionalism"
"open": a commercial opening combined with agreements that include services,
Intellectual property, environmental and labor policies. (Conference of the
United Nations Conference on Trade and Development –UNCTAD– “Multilateralism and
Regionalism: the new interaction” by Mina Mashayekhi and Taisuke Ito, 2005).

4. Art 4.1 MERCOSUR-EU FTA.

5. The expression “advantages related to controls” is taken verbatim from art. 4.8 numeral

6 https://www.aduanas.gub.uy/innovaportal/v/21060/6/innova.front/se-firmo-el-acuerdo-de-
mutual-recognition-of-the-authorized-economic-operator-programs-of-mercosur.html

7. https://www.aduanas.gub.uy/innovaportal/v/27586/1/innova.front/aduana-avanza-en-la-mejora-de-la-seguridad-de-la-cadena-de-suministro-internacional.html

8 https://www.wcoomd.org/-/media/wco/public/es/pdf/topics/valuation/instruments-and-
tools/gatt/20_vales.pdf?db=web