Europe

EU, S.America bloc strike free-trade deal

The European Union has struck a free-trade deal with four South American states after two decades of talks, creating the world's biggest free-trade area.

The European Union and the Mercosur bloc of South American states have struck a free-trade deal after two decades of talks, creating the world's largest free-trade area.

Once implemented, the deal will remove trade barriers and boost exports, creating a market of nearly 800 million people.

It includes protections for employees and the environment while upholding high food standards, according to the European Commission, which has been negotiating on behalf of the bloc's 28 member states.

However, critics say the deal does not sufficiently rein in environmentally harmful actions, such as deforestation in the Amazon rainforest in order to create lucrative farmland.

Some consumer groups have warned that the EU's high standards could be undermined to ease Mercosur's access to European markets.

The talks began in 2000 and were relaunched in 2016 following a 12-year hiatus. Agricultural exports to Europe have been a key point of contention, with European farmers fearing cheaper competition.

Mercosur's members are Argentina, Brazil, Paraguay and Uruguay, encompassing a population of 260 million people. Venezuela was suspended in 2016.

"This will be one of the most important trade agreements of all time and will bring enormous benefits to our economy," Brazilian President Jair Bolsonaro tweeted, calling it a "GREAT DAY!"

Exports from EU companies to the Mercosur group amounted to around 45 billion euros ($A73 billion) in 2018, with 42.6 billion euros ($A69 billion) going in the other direction. The EU is already the most important trading and investment partner for the Latin American bloc.

The Mercosur countries mainly export food, drinks and tobacco to the EU's 512 million residents. The EU sends mainly machinery, transport equipment, chemicals and pharmaceutical products.

European Commission President Jean-Claude Juncker hailed "a historical moment".

"In the midst of international trade tensions, we are sending today a strong signal with our Mercosur partners that we stand for rules-based trade," he said, noting it is the largest trade deal ever concluded by the EU.

The Commission said that under the deal the majority of tariffs on exports from the EU to Mercosur countries will be removed.

Environmentalists in particular fear global consequences. Brazil's Bolsonaro, who Malmstrom credits with reviving the stalled talks, is considered close to the agricultural industry and not an ally in efforts to combat climate change.

The Amazon rainforest plays a major role in capturing global carbon-dioxide emissions and could be opened up further to deforestation.

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