Material extraction scenarios under the MERCOSUR-EU trade agreement

Key findings Link to heading

  • Under the baseline agreement scenario, MERCOSUR-4 economies face a projected increase in material extraction of 8–15% by 2034, driven primarily by biomass and mineral demand from the EU-27; the magnitude varies with tariff-reduction intensity and phase-in duration.
  • Non-negative Tensor Factorisation (NTF) of the GLORIA database (1990–2022) identifies six latent extraction patterns, each linking specific country clusters to distinct material categories — revealing that trade liberalisation does not affect all economies uniformly but rather amplifies pre-existing structural specialisations.
  • EU-27 domestic extraction remains broadly stable across scenarios, consistent with a continued externalisation strategy whereby material-intensive production shifts to trade partners whilst domestic consumption patterns persist.
  • The biomass component — which includes agricultural commodities central to MERCOSUR exports such as soy, beef, and wood pulp — exhibits the largest sensitivity to agreement parameters, suggesting that environmental provisions in the trade deal would need to target this category specifically to mitigate extraction pressures.

Data and method Link to heading

The scenario projections rest on the GLORIA Multi-Regional Input-Output (MRIO) database (Lenzen et al., 2017; 2022), which provides environmentally extended supply-use tables for over 160 economies from 1990 to 2022. Material extraction accounts are decomposed via Non-negative Tensor Factorisation (NTF) with K = 6 components and an overall fit of R² = 0.75, yielding six interpretable extraction patterns that capture the co-movement of countries, material categories, and time periods.

Tariff-shock scenarios are modelled by adjusting the bilateral tariff matrix between MERCOSUR-4 and EU-27 economies under three parameters: intensity (percentage tariff reduction), agreement entry year, and phase-in duration. The dashboard projects the resulting changes in extraction volumes by country and material category to 2034, holding all other trade relationships constant.

How to use the dashboard Link to heading

The map displays country-level extraction impacts, filterable by the six NTF-derived patterns. Temporal and component-level charts below the map decompose each bloc’s response to the tariff shock. Three adjustable parameters control the scenario: tariff-reduction intensity, agreement entry year, and phase-in duration. Open fullscreen

Data: GLORIA MRIO (Lenzen et al., 2017; 2022). NTF: K=6, R²=0.75.