The EU-Mercosur agreement has entered into provisional force. European companies are expected to gain significant tariff advantages in the automotive, machinery, textile, and pharmaceutical sectors, while Turkish exporters will continue to face higher tariffs due to the absence of a free trade agreement between Türkiye and Mercosur.
The agreement between the European Union (EU) and the Southern Common Market (Mercosur), which eliminates customs duties on more than 90 percent of trade, has recently started to be implemented on a provisional basis. Signed between the EU and Mercosur member states Argentina, Brazil, Paraguay, and Uruguay, the agreement covers a population of nearly 700 million people. Since the approval process in the European Parliament has not yet been completed, the agreement is currently being applied temporarily despite covering approximately 20 percent of global gross domestic product (GDP). In a statement shared on social media, European Commission President Ursula von der Leyen said: “The EU-Mercosur agreement starts being provisionally applied today. Its benefits are already becoming real and visible. Tariffs are starting to fall. Companies are gaining access to new markets. Investors are obtaining the predictability they need. Provisional application will demonstrate the concrete benefits of the agreement and how legitimate sensitivities are being addressed.”
According to an information note published by the European Commission, the agreement introduces significant tariff reductions particularly for EU-origin products in the automotive, machinery, pharmaceutical, and textile sectors. Within the scope of the arrangement, customs duties on electric and hybrid vehicles were reduced from 35 percent to 25 percent, while tariffs on internal combustion engine vehicles were lowered from 35 percent to 17.5 percent. In the textile sector, tariffs are expected to be fully eliminated at the end of a 10-year transition period, with an initial reduction of 3.9 percentage points already implemented. In machinery and equipment, tariffs ranging between 14 and 20 percent are planned to be reduced to zero within 10 years. In the pharmaceutical sector, tariffs reaching up to 14 percent will also be gradually removed over the same period.
Turkish companies will have to enter markets with higher tariffs
The most critical aspect of this development for Türkiye stems from the current structure of the Customs Union. Under the free trade agreements signed by the EU with third countries, goods entering the EU market from those countries can also reach Türkiye with low or zero tariffs through the Customs Union mechanism. However, since reciprocity does not function in the same way, Turkish exporters cannot access those markets under similar conditions. In the Mercosur example, Türkiye does not have a separate free trade agreement with Mercosur countries. As a result, Turkish companies operating in the textile, automotive, and machinery sectors will have to enter the same markets by paying higher tariffs compared to their EU-based competitors.
Which sectors are expected to be affected more directly?
Textiles and apparel, automotive supply industry, machinery, and white goods are among the leading sectors in Türkiye’s exports to the Mercosur market, and these sectors compete directly with European manufacturers. With the agreement entering into force, EU-origin products are expected to gain a substantial pricing advantage in these industries, potentially making it more difficult for Turkish exporters to maintain their market share. Discussions that sector representatives have long emphasized — particularly the modernization of the Customs Union and Türkiye’s inclusion in the EU’s free trade agreement negotiations in parallel — are also expected to regain prominence following this development.
