Our figure of the month 09/2021: Trade flows between EU and MERCOSUR countries

After 20 years of negotiations between the EU and the MERCOSUR countries (Brazil, Argentina, Uruguas and Paraguay), agreement was reached on the trade part of the agreement on June 28, 2019. Ratification is still pending, but if the agreement enters into force, the largest free trade area to date will be created for the European Union. For the MERCOSUR countries, it will be the first trade agreement ever. Enough reason to take a look at the trade flows between the EU and MERCOSUR countries.

The chord diagrams show the total exported or imported volume of a country with its trading partners. The width of the scale colored individually for each country (the scale at the outer edge) reflects the level of export/import volume. The width of the strands reflect the level of exports, or imports. The color of the strands indicates the country from which exports are made. For a better overview, the countries' exports are shown in the lower half and imports in the upper half of the diagrams. The chord diagrams below show that Brazil is the largest exporter (left figure) as well as the largest importer (right figure) in this trade zone. The amount of Brazilian exports ($30 billion) to the EU is roughly identical to the amount of Brazilian imports ($32 billion) from the EU. On the EU side, Germany is the largest exporter to the MERCOSUR countries (USD 14 billion). A large part of this export volume goes to Brazil (USD 12 billion). The Netherlands is the largest European buyer of MERCOSUR exports (USD 8.5 billion). Paraguay and Uruguay, like the smaller EU states, account for only a small share of trade.

The chord diagrams show the absolute trade flows in each case. These show that a large part of the trade is also attributable to the largest countries in each of the two groups of countries (Brazil and Germany). The trade flows also illustrate that trade between the EU and MERCOSUR is very diversely distributed among all countries. Each country from one of the country groups trades with many, or even all, of the countries in the other country group. Thus, all countries would benefit from a tariff reduction through a free trade agreement.

Other figures can be found here.

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