The European Union and the South American bloc Mercosur reached a free trade agreement

According to the Associated Press, the agreement between the EU and Mercosur, which was developed over 25 years, aims to create one of the largest free trade zones in the world, covering more than 700 million people and almost 25% of the Global GDP. The goal of the agreement is to reduce tariffs and trade barriers to make it easier for companies on both sides to export goods.

The president of the EC, Ursula von der Leyen, stated that the agreement will have a positive impact on some 60 thousand companies that export goods to Mercosur countries. According to the commission president, companies “will benefit from reduced tariffs, simplified customs procedures and preferential access to some critical raw materials.”

However, ratification of the agreement will require additional efforts, as some EU countries, led by France, oppose the agreement, Bloomberg writes. According to the agency, opponents are concerned about how the treaty will affect the agricultural sector.

European farmers fear that an influx of products from Latin America, which are produced under lower health and environmental standards, will put them at a disadvantage, Bloomberg notes.

In turn, von der Leyen indicated that EU authorities have taken into account the concerns of workers in the agricultural sector, and the agreement includes “strong guarantees” to protect them.