Analysts in the Czech Republic: The EU-Mercosur agreement is good for the economy and consumers
Prague – The trade agreement between the European Union and the South American bloc Mercosur is good news for the European economy as well as for consumers themselves. Competition on the European market will increase, which could lead to efforts to reduce product prices and improve their quality. However, the agreement could negatively affect farmers and food producers. With this step, Europe has opened up a new market outside the USA and China. The trade arrangement is also positive news for the Czech Republic itself, although the real impacts will be rather indirect, according to analysts contacted by ČTK.
According to the analyst of the investment platform XTB, Pavel Peterka, the agreement is one of the examples of reducing barriers to international trade, which have a positive impact on the entire European economy. Similar trade ties can, in his view, help offset the shortfall in trade relations with the USA. Under President Donald Trump, the USA introduced tariffs on the import of some products and commodities, he recalled.
It is also an important moment at a time when markets are focusing more on protecting the domestic market from foreign competition, according to the economist of Deloitte, David Marek. At first glance, an ordinary agreement is, in his view, the EU’s trade strategy. “At a time of trade fragmentation, it is opening up a large market outside the USA and China and reducing dependence on a few territories,” Marek said.
The agreement was supported by 21 countries, including the Czech Republic. France, Poland, Hungary, Austria and Ireland spoke out against it. Belgium abstained. Opponents of the agreement with Mercosur, according to Peterka, are pursuing their own interests and not the interests of the European economy as a whole. “But the consumer will win. Thanks to stronger competition, there will be pressure to reduce prices and increase quality. It will be similar in other areas as well. In addition to agriculture, the production of beef and poultry, there will be stronger competition, for example in sugar, ethanol, citrus fruits, honey and rice,” Peterka added.
The Czech Republic is, in his view, one of the biggest winners of this agreement. One of the main goals of the EU was to reduce tariffs and other trade barriers for the export of the European automotive industry, which is key for the Czech economy. The agreement should also help Germany, which, thanks to interconnectedness, will also have an impact on the Czech economy. According to Marek, the agreement will manifest itself in the Czech economy in the form of higher subcontracting in the fields of engineering, the automotive industry and electronics. (11 January)
