The agreement must now be ratified by both sides, but it is intended to phase out all EU duties charged on industrial goods, including metals and metal items, over a period of 10 years.

In return, the Mercosur countries - Brazil, Argentina, Uruguay and Paraguay - will phase out duties on EU exports of industrial goods which cover 91% of Europe-origin industrial products sent to those countries.

The full text of the agreement has yet to be released, so it was not clear at the time of publication which metal product lines might not be included in the Mercosur commitment. But a note from the European Commission said that “the agreement offers EU and Mercosur industries easier access to high-quality raw materials and parts, to boost their competitiveness.”

The deal will come into force once it has been ratified by both sides. Assuming that happens, EU duties on Mercosur exports will no longer be applied to aluminium and related products from Brazil, where tariffs generally range between 6% and 7.5%.

Copper imported from Brazil is already duty-free for basic metal but 4.8% duty is often charged for copper products.

Argentina-sourced imports of aluminium currently attract 3% for unwrought metal and 5.9% for many products.

Tariffs on EU exports that are expected to be scrapped include most Brazilian imports of aluminium and copper, which attract 6% duty; zinc and lead, which largely attract 8% duty; and silver (including plated products), where duties are largely 12%, except for powder and unwrought silver, which attract duty at 6%.

For EU exports to Argentina, duty is applied at 6% to aluminium and unrefined copper. The corresponding duty is 6% on aluminium for sales to Paraguay, but aluminium sales to Uruguay are already duty-free.

Gerd Götz, director general of industry body European Aluminium, has welcomed the deal. He told Fastmarkets that his group was “always in favor of international free trade, as long as global competitors adhere to the same market rules and environmental, social and health standards.”

For base-metals industry body Eurometaux, international trade and economy director Elena Vyboldina told Fastmarkets that the group “welcomes the recently concluded EU-Mercosur trade agreement, which will improve non-ferrous metals trade flows between the two entities.”

“European metals producers will benefit from improved access to the Mercosur markets,” she added, “improving the conditions for our exports of semi-finished and finished products.”

Of equal importance, she said, the agreement will make it easier to trade primary raw materials and metals scrap from the Mercosur region into Europe, “supporting Europe’s strategic objectives to secure access to raw materials and boost ‘circular economy’ activities.”

Trade in non-ferrous metals between the EU and Mercosur countries is already healthy, particularly in aluminium and copper, judging by statistics from the EU’s statistical agency, Eurostat.

In 2018, the EU imported €22.8 million-worth ($25.77 million) of aluminium from Argentina, up from €14.1 million in 2017. The EU imported €43.28 million of aluminium from Brazil, but this was only around half as much as the €84.48 million imported in 2017.

The EU imported €1.3 million of aluminium from Uruguay in 2018 and only €280,000 of aluminium from Paraguay in the same period.

The EU imported the most copper from Brazil in 2018 (€32.67 million), followed by Paraguay (€6.48 million) and Uruguay (€3.03 million). It imported considerably less from Argentina (€440,000).

As for European shipments to Mercosur, in 2018 the EU exported a hefty €218.3 million of aluminium to Brazil, a substantial increase over the €177.38 million recorded for 2017. The EU exported €62.1 million of aluminium to Argentina, €6.64 million to Paraguay and €4.08 million to Uruguay in 2018.

Turning to copper, the main Mercosur recipient of EU exports in 2018 was again Brazil, with €53.8 million, a small increase over the €50.35 million in 2017. In 2018, the EU exported €6.36 million of copper to Argentina. This figure was only half as much as the €12.2 million recorded in 2017.

Uruguay ranked third in 2018 with €1.44 million and Paraguay fourth with €160,000.

Other important non-ferrous metal trade flows between the EU and Mercosur countries include: lead exported from Brazil to the EU (€4.5 million in 2018); zinc from Brazil to the EU (€3.5 million in 2017); tin from Brazil (€72 million in 2018); and gold from Brazil (€762 million in 2018) and from Paraguay (€16.2 million in 2018). These figures cover metal and metal products in all instances.

In exports from the EU, values were generally lower, although €13 million of zinc was exported to Brazil in 2018; €30.5 million of silver (including gold and platinum plated items), also in 2018; and €11.8 million of lead in 2017.

While its principal purpose is to reduce duties, the EU-Mercosur deal includes commitments to rationalize import and licensing procedures, the use of international standards to harmonize technical rules that can impede trade, and an agreement that will liberalize government procurement. All of these initiatives should help to boost imports and exports.

Götz added that he hoped the agreement would promote a more international approach to the problem of Chinese subsidies, which have led to EU metal producers being forced out of the Mercosur markets by cheaper Chinese materials.

“Unfortunately, free and fair trade is under threat due to the year-on-year increase in Chinese aluminium capacity, fuelled by massive domestic subsidies,” he added.

“In this trade climate,” he said, “it is not only important to find a global solution to address the problem of excess capacity, but also to guarantee effective implementation of EU customs regulatory provisions, including strict rules of origin.”

The EU trade commissioner who negotiated the agreement was Cecilia Malmström. She added: “Today’s agreement brings Europe and South America closer together in a spirit of cooperation and openness. It will create a market of 780 million people, providing enormous opportunities for EU businesses and workers, in countries with whom we have strong historical links and whose markets have been relatively closed up to now.”