The President of the European Commission, Ursula von der Leyen, and her counterparts from four Mercosur countries, Brazilian President Lula, Argentinian President Milei, Paraguayan President Peña, and Uruguayan President Lacalle Pou, finalized negotiations for an EU-Mercosur partnership agreement.

President of the European Commission, Ursula von der Leyen, said that “this is a win-win agreement, which will bring meaningful benefits to consumers and businesses, on both sides. We are focused on fairness and mutual benefit. We have listened to the concerns of our farmers and we acted on them. This agreement includes robust safeguards to protect your livelihoods. EU-Mercosur is the biggest agreement ever when it comes to the protection of EU food and drinks products. More than 350 EU products now are protected by a geographical indication. In addition, our European health and food standards remain untouchable. Mercosur exporters will have to comply strictly with these standards to access the EU market. This is the reality of an agreement that will save EU companies EUR 4 billion worth of export duties per year.”

The agreement

The European Commission said that this agreement comes at a critical time for both sides, presenting opportunities for major mutual gains through strengthened geopolitical, economic, sustainability and security cooperation. It will boost strategic trade and political ties between like-minded and reliable partners and support economic growth, boost competitiveness and strengthen resilience on both sides by opening up trade and investment opportunities and securing sustainable access and processing of raw materials. It represents a major milestone in fighting climate change with strong, specific and measurable commitments to stop deforestation. It considers the interests of all Europeans, including the critically important EU farming sector and will help increase EU agri-food exports while protecting sensitive sectors.

According the European Commission, this landmark deal will:

• Secure and diversify the EU supply chains.
• Create new opportunities for all kinds of businesses, by removing often prohibitive tariffs on EU exports to Mercosur.
• Save EU businesses €4 billion worth of duties per year.
• Ensure trade preferences in strategic net zero industry sectors such as renewable energy technologies, and low-carbon fuels.
• Help small and medium enterprises export more by cutting red tape.
• Secure an efficient, reliable and sustainable flow of raw materials critical for the global green transition.

Moreover, €1.8 billion in EU support will facilitate the fair green and digital transition in Mercosur countries, as part of the Global Gateway.

The deal still faces a lengthy process to be ratified and go into effect, which could take years. The proposed EU-Mercosur agreement is composed of a political and cooperation pillar and a trade pillar. The end of negotiations constitutes the first step in the process towards the conclusion of the agreement.

First industry reactions

Current trade relations between the EU and Mercosur are based on an inter-regional Framework Cooperation Agreement, which entered into force in 1999. The EU and individual Mercosur countries also have bilateral framework cooperation agreements, which deal with trade-related matters. The new agreement should remove tariffs on goods like wine, cheese, spirits, chocolate, automobiles or clothing and limited quotas have been introduced for products such as beef, poultry or sugar.

South American farmers and exporters are keen to have greater access to the huge European market, however, European farmers, especially French ones, are opposed to the deal. For its supporters, led by Germany and Spain, the agreement will open new markets for Europeans, while maintaining influence in the region at a time when China is increasing its investments in Latin America. Its opponents are worried about competition from imports of agricultural products into Europe.

“For years, we have expressed firm opposition to this outdated and problematic agreement. While we recognize the EU's need to deepen trade relations in the current geopolitical context, this must not come at any cost. The EU agricultural sector remains particularly vulnerable to the concessions made in the unbalanced agricultural chapter of this agreement. Sensitive sectors such as beef, poultry, sugar, ethanol, and rice face heightened risks of market saturation and income loss due to the influx of low-cost products from Mercosur countries. This agreement will exacerbate the economic strain on many farms already grappling with high input prices and challenging climatic conditions,” COPA and COGECA said in a joint statement.

Cogeca president Lennart Nilsson said that "EU farmers and agri-cooperatives are not opposed to trade but advocate for agreements that are fair, balanced, and environmentally sustainable. The current EU-Mercosur agreement fails to meet these criteria, using the agricultural sector as a bargaining chip to benefit other industries. COGECA also calls on EU member states and the European parliament to take a strong stance against this deal."