After a quarter-century of talks, the EU-Mercosur trade agreement—one of the world’s most ambitious trade deals—is closer than ever to the finish line. After a political handshake back in December last year, it will soon be handed over to lawmakers to seal the final deal, which might even come this year. But is it a done deal, and who gets to sign off on it? How are the new more volatile geopolitical trade realities impacting decision-makers? And can it be stopped or changed at this late stage? Oliver Moore takes us through the choppy waters.
In December 2024, a political agreement between the European Commission and the Mercosur countries – Brazil, Argentina, Uruguay and Paraguay – was finalised. If approved, this would open up a trade market worth nearly a quarter of the world’s GDP.
A 2019 version of the agreement stalled after much opposition, and was criticised by the Ombudsman for not having “an updated sustainability impact assessment” completed.
Now changes have been made and the global trade environment is different, with a volatile US slapping tariffs on and off countries and trade blocs everywhere.
Text on the Paris Agreement has been added as a supposedly “essential” element; a new annex has been added to the Trade and Sustainable Development chapter with deforestation commitments. Increased amounts of pork and biodiesel imports into the EU from Paraguay were also added. 350 European food and drink products with Geographical Indications were added as ‘protected’ in Mercosur countries.
A rebalancing mechanism was added whereby “if a party considers that a measure of the other party nullifies or substantially impairs its benefits under the agreement, it can ask a panel to rule on this question.“
The agreed Mercosur deal would remove import duties on a whopping 91% of EU goods exported to Mercosur, and 93% of goods going the other way. Preferential access is to be given for the remaining percentages, with some especially sensitive products treated differently in the short term.
For agriculture, many sectors in farming are seen as especially sensitive: beef, sugar, and poultry directly so, with pork, dairy, dairy products, and wine and spirits indirectly so.
Because of this, the following adjustments have been made:
- Beef: A quota of 99,000 tonnes per year is established, with a 7.5% duty applied. This quota comprises 55% fresh or chilled meat and 45% frozen meat.
- Poultry: 180,000 tonnes per year can be imported duty-free, phased in over five years.
- Sugar: 180,000 tonnes of raw cane sugar for refining will be allowed into the EU duty-free under an existing quota. Additionally, a new duty-free quota of 10,000 tonnes is allocated for Paraguay.
Up to €1 billion is to be set aside for awkward transitions of certain sectors, especially farming, but it is unclear, other than likely during Multiannual Financial Framework negotiations, where this money will come from.
Food systems, forestry and climate
CAN Europe’s 2025 legal analysis of sustainability provisions found that the Paris Agreement references are largely symbolic, and cannot trigger consequences for non-compliance. There are no binding emissions reduction targets written in.
Critics add that there have been such commitments added to the EU New Zealand Free Trade agreement. This agreement includes legally binding commitments to “effectively implement” the Paris Agreement. Both the EU and New Zealand are obligated to refrain from any actions that “materially defeat the object and purpose” of the Agreement. These commitments are enforceable through the FTA’s dispute settlement mechanism, with trade sanctions as a last resort in cases of serious violations.
Recent EU agreements with New Zealand and also Chile have dedicated sustainable food systems chapters; no such chapter exists in Mercosur. These cover “the sustainability of the food chain and reduction of food loss and waste, the fight against food fraud along the food chain, animal welfare, fight against antimicrobial resistance and the reduction of the use of fertilizers and chemical pesticides for which a risk assessment has shown that they cause unacceptable risks for health or the environment.” (Cpt 7.2.2 EU Chile agreement)
Green groups have also largely written off the forestry protections supposedly stemming from the EU’s Deforestation Regulation (EUDR).
Already, this Regulation has been significantly weakened. When the risk level for third countries was finally announced in May, only four were categorised as high risk: North Korea, Belarus, Russia and Myanmar. In total these account for 0.07% of deforestation-related commodity-production globally, according to NGOs.
Similarly, many terrains are excluded, such as the Cerrado (savanna). Many commodities driving deforestation are exempt, while there are no dedicated supports for smallholders in exporting countries to change practices towards more sustainable ones – instead companies may simply move to less regulated places.
Importantly the rebalancing mechanism of Mercosur may result in the weak EUDR itself being challenged, according to Michael Rice of Client Earth. Moreover a free trade agreement could be politicised to downgrade risk level.
In any case, attacks come from inside the EU too. In reality EUDR is constantly under threat, with right-wing forces in the European Parliament rumoured to be mounting another assault in the autumn, according to sources familiar with the Parliament’s workings.
Deforestation is set to increase under Mercosur. Estimates range from 620,000-1.35 million acres over five years due to increased cattle and soy; a French government study predicts a 5-25% increase over six years (referenced here), while some studies suggest the impact may be variable or minimal.
Human rights, farming, consumer and labour organisations also have a number of critiques of the deal. For Indigenous groups, a lack of prior consent (as mandated by the UN Declaration on the Rights of Indigenous Peoples) is cited.
Next steps
Some member states such as France are under internal pressure due to the global tariff and trade situation. Nevertheless the official position of France remains against Mercosur in its current form.
Critics argue that additional protocols or amendments can be added, which could lead to a rebalancing version of the agreement (an “interpretative declaration” or “side letter”).
For ratification, the European Commission may break Mercosur into parts, which would smooth its path to completion, whatever about the democratic deficit in such an approach.
This split agreement approach would mean that the trade components can be adopted without unanimous approval from EU Member States or ratification by national parliaments.
Options currently live for ratification are:
- EU-Only Agreement: If the agreement falls entirely under EU exclusive competence, it requires:
- Approval by a qualified majority in the Council (at least 15 of 27 member states, representing 65% of the EU population).
- Consent by the European Parliament.
- Mixed Agreement: If the agreement includes areas of shared competence, it requires:
- Split Agreement: The agreement could be divided into two parts:
Conclusion
With an erratic, protectionist US as a trade partner, and with a deal agreed with so many years of negotiations behind it, there is much external pressure to finish it off. Equally, it could be argued that everyone is in the same boat: both the EU and Mercosur countries are equally in need of trade, so can equally put up with strengthening social, environmental, health and rights dimensions.
The lock-in Mecosur would lead to – of growth and extractive, resource-heavy commodity production – also exerts its own pressure on ecosystems and human rights. Opponents remain opposed, despite the changes.
Ratification via national parliaments would delay, perhaps fatally, its chances of passing. And this is why the Commission will do everything it can to prevent this.
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