European Wines Poised for Gains as Mercosur Tariffs Begin to Fall

European wine producers are expected to gain wider access to Mercosur markets after the provisional application of the trade agreement between the European Union and the South American bloc began on May 1, opening the way for a gradual reduction of import duties in Brazil, Argentina, Uruguay and Paraguay.

The European Commission estimates that EU exports to Mercosur could rise by as much as 50% once the agreement is fully implemented. Wine is among the products expected to benefit most from the new framework, along with olive oil, because of the planned reduction of tariffs that have long limited European competitiveness in the region.

María Canal Fontcuberta, spokeswoman for the European Commission Representation in Spain, said Tuesday in Madrid that wine currently faces a 35% import duty when entering Mercosur. That tariff is expected to be gradually removed as the agreement takes effect, lowering one of the main barriers for European wineries seeking to expand in South America.

Fontcuberta spoke during a roundtable on trade agreements and tariffs at the third Agroforum, organized by Alianza Rural and IESE Business School. She said EU exports to Mercosur countries account for about 6% of the bloc's total exports, leaving room for growth in food and beverage sales under the new trade terms.

The Commission expects the agreement to increase EU gross domestic product by 0.05% once fully in force. For Mercosur countries, the projected gain is 0.25%. Brussels has presented the pact as part of a broader effort to strengthen Europe's trade position at a time of growing competition with the United States and China.

The agreement also includes limited tariff-rate quotas for sensitive products, including poultry, as well as bilateral safeguards that can be activated quickly. Fontcuberta said EU sanitary and phytosanitary standards will remain mandatory for all products entering the European market.

On animal welfare, she said the agreement includes rules on laying hens and livestock transport for the first time. The Commission has also increased audits in third countries by 50% to verify compliance with export standards, and border checks will rise by 33% over the next two years.

Other speakers at the event said the agreement could create opportunities across several agricultural sectors. Javier Serra, agriculture, fisheries and food counselor at the Spanish Embassy in Washington, said the food sector is expected to retain its importance despite international political tensions. Wenceslao Bunge, Argentina's ambassador to Spain, said the pact could benefit industries including wine, meat, citrus, honey and rice.

For European wineries, the impact will depend on how tariff reductions are reflected in final prices and export volumes. Producers have long argued that high entry duties make their wines more expensive than local bottles and competitors from countries with more favorable market access.