Trade talks resulted in an initial agreement in June 2019, but since then both parties have strengthened the text with new sustainability commitments. The final version was signed on December 6, 2024, in Montevideo.
This historic agreement opens up a potential market of more than 750 million people , and positions the EU as Latin America's main strategic partner.
The partnership is structured around three fundamental pillars : political dialogue, cooperation, and trade. From a geopolitical perspective, it aims to establish the EU as a key partner in Latin America and to consolidate a strategic relationship based on shared values and a common vision of sustainable development, including democracy and human rights.
To be implemented, the agreement must now be ratified by the member states of both blocs. Last September, the European Commission officially approved the text submitted to the member states, which is therefore ready for ratification (generally through a legislative vote).
Things could now move quickly given the global trade context. Brazilian authorities and those of several European countries are eager to ratify the agreement rapidly in order to provide a boost to businesses in both blocs impacted by Donald Trump's tariffs. The Commission hopes that ratification in member states can take place by the end of the year. Even Emmanuel Macron has expressed optimism about this objective, despite the controversy surrounding the agreement in France.
EU-Mercosur agreement: economic and trade benefits for the EU
The agreement is seen as essential to strengthening European competitiveness by diversifying and securing supply chains.
Key figures and financial gains
Trade and Investment: The EU is the largest investor in Mercosur countries, with a stock of foreign direct investment (FDI) reaching approximately €390 billion in 2023 (or €388 billion according to another source).
Trade Partnership: The EU is Mercosur's second largest trading partner in goods, accounting for almost 17% of the bloc's total trade in 2024.
Elimination of Customs Duties: The immediate financial impact on European businesses is considerable. The pact provides for the elimination of customs duties on 91% of European exports to Mercosur. This elimination will allow European companies to save more than €4 billion per year in customs duties, eight times the tariff savings offered by the agreement with Canada.
Growth and Employment: The EU estimates that its exports of goods to the four Mercosur countries will increase by 39% to 40%, amounting to approximately €49 billion. This is expected to lead to the creation of 440,000 new jobs . EU exports to Mercosur already support 756,000 European jobs.
Sector-specific advantages (goods and services)
Industrial Sector: Mercosur will liberalize 90% of its industrial imports from the EU, directly benefiting sectors traditionally subject to heavy import tariffs. This elimination will be phased in over 10 years for the majority of products. Beneficiary sectors include automobiles and their components, capital goods, and chemical and pharmaceutical products. Certain products, such as leather footwear, toys, clothing, and wine, will benefit from the removal of tariffs currently reaching 35%.
Services and Public Procurement: The agreement improves access to key services (financial, postal, telecommunications, international maritime transport). It also offers European companies non-discriminatory access to Mercosur public procurement markets , a particularly relevant point since these countries are not signatories to the WTO Agreement on Government Procurement.
SMEs: The pact aims to facilitate preferential access for Small and Medium Enterprises (SMEs) to markets and to reduce costs and non-tariff barriers.
Critical raw materials (CRMs)
The agreement is instrumental in ensuring a secure and sustainable supply of critical raw materials , essential to the EU's ecological and digital transition.
It ensures preferential access to materials crucial for the EU's strategic autonomy, such as lithium, silicon and graphite .
Brazil is a major producer of niobium (88.8% of global processing and 82% of EU supply), natural graphite, and manganese. Argentina is a key player in lithium production.
European tariffs on MPCs will be lowered, encouraging Mercosur exports to the EU and reducing costs for European businesses. The agreement also establishes one of the highest sustainability standards for MPC trade.
The agreement includes ambitious, legally binding commitments regarding sustainability.
Climate and deforestation: The Paris Agreement on climate change is a key clause of the pact, and its abandonment by one of the parties could lead to the suspension of the agreement. The text includes a clear and legally binding commitment to halt deforestation by 2030 .
EU legislation: The agreement guarantees that EU legislation on deforestation (applicable at the end of 2025) applies to imported products (soybeans, beef, palm oil, etc.), ensuring that imported goods do not contribute to deforestation in Mercosur countries.
Principles of sustainability: The agreement promotes the non-regression of environmental and social standards. It also promotes trade in products that contribute to the conservation of biodiversity and prohibits trade in illegally obtained products, particularly timber.
Labour rights: The parties undertake to respect the rules of the International Labour Organization (ILO) concerning forced and child labour, non-discrimination, freedom of association and the right to collective bargaining.
EU-Mercosur agreement: controversies surrounding European agriculture
The agreement faces fierce resistance from European agribusiness, particularly in France and Poland, which fear an influx of sensitive food products (beef, poultry, sugar, rice). Poland, in fact, intends to lead a blocking minority against the agreement .
Maintaining health standards and protections
The agreement maintains strict EU standards for food safety, animal and plant health (SPS standards), which remain non-negotiable.
Controls: All products sold in the EU must comply with these standards. This includes a robust, science-based import system, risk assessments, audits of third countries, and border controls. Imported meat must come from animals slaughtered under welfare conditions equivalent to those in the EU.
Precautionary Principle: The agreement reaffirms the precautionary principle, allowing both parties to adopt provisional measures to protect health and the environment, even in the event of inconclusive scientific information.
These standards were the subject of lengthy discussions between the two blocs, as they were perceived as a hindrance to South American exporters. However, they can also be an opportunity for these companies to improve the quality of their products, as indicated by the Uruguayan Minister of Foreign Affairs .
Quotas and geographical indications (GI)
For sensitive agricultural products, access to the EU market is limited by progressive quotas:
Beef: The agreement does not grant duty-free access for beef from Mercosur. It will allow 99,000 tonnes to enter the EU with a 7.5% duty. This volume represents 1.5% of total European beef production and is less than half of current Mercosur imports (206,000 tonnes in 2024).
Poultry and Sugar: A duty-free quota of 180,000 tonnes will be opened for poultry, phased in over five years (representing 1.3% of total EU production). For sugar, an existing WTO quota of 180,000 tonnes of raw cane sugar for refining will become duty-free for Brazil, and a new quota of 10,000 tonnes is planned for Paraguay (representing 1.1% of European sugar production).
Rice: A quota of 60,000 tonnes of Mercosur rice will be allowed duty-free, a volume lower than existing imports.
Protection of GIs: The agreement ensures the protection of more than 350 (or 344) European Geographical Indications in order to prevent the imitation of these traditionally quality products.
EU-Mercosur Agreement: Ratification Process and Future Prospects
Ratification requires the approval of the EU Council and the European Parliament. However, the European Commission has proposed the EMPA and the Interim Trade Agreement (iTA) for a potentially provisional entry into force of the trade component, without waiting for ratification by national parliaments.
Political resistance is strong: Poland and France are firmly opposed, with Poland even attempting to form a blocking minority.
If the agreement is fully ratified, the EU will have trade agreements covering 95% of Latin America and the Caribbean's GDP. Average trade flows between Mercosur and the EU are expected to increase by 37% in the long term.
Furthermore, by interconnecting existing free trade agreements (through cross-accumulation of rules of origin and Mutual Recognition Agreements), bilateral trade between the EU and Mercosur could increase by up to 70% . Ultimately, this could create an integrated EU-Latin America economic area of 1.1 billion people , with a GDP comparable to that of the United States.
Thanks!
Thanks for reading this post. Please consider spreading the word to your network!