Barely a month ago, the long-awaited and controversial Mercosur agreement finally became a reality. The pictures of its signing in Asunción, Paraguay, attest to this milestone, depicting European Commission President von der Leyen and European Council President Antonio Costa holding hands with leaders of the Latin American countries involved, wide smiles adorning each of their faces.
Mercosur’s is a story of negotiation tables and long diplomatic processes but also of angry farmers, tractors taking over the streets and the old narrative of the clash between globalization and the survival of small local communities. However, is that all that there is to the deal? Upon a closer look, one will find that not everything is so simple as it seems.
The agreement – what exactly are we looking at?
Mercosur is the EU’s second largest trade partner; their economies combined would potentially account for 25% of the world’s GDP. Mercosur or Mercado Común del Sur (Southern Common Market in English) constitutes a trading bloc made up of certain Latin American countries, namely, Argentina, Brazil, Paraguay, Uruguay. Trade between Mercosur and the EU has been buzzing with activity for many decades now; mostly agricultural products are imported and exported, including beef, poultry or olive oil. Up until now, trade relationships between the EU and these countries had been governed by bilateral agreements: the recently signed EU-Mercosur Partnership agreement will significantly change that.
Although it includes a political dialogue and cooperation pillars, the deal is notably focused on trade. Over a ten-year period, Mercosur countries will remove import duties (i.e. taxes) on a high number of EU imports whereas the EU will do likewise for Mercosur products, making it easier for South American agricultural goods to get into the European single market. Some products considered to be particularly sensitive for the agricultural sector (beef, poultry or sugar, for instance) will be subject to tariff rate quotas; that is, a pre-determined quantity of these products will be imported at a lower duty rate.
Why now?- Understanding its timeline
All in all, this is the most ambitious trade agreement ever envisioned by the European Union and most probably, its longest one to achieve as well. Indeed, official talks can be traced back as far as June 1999, marking the start of a long and complex negotiation process that hit a milestone in 2019, when a political agreement between the two parties was reached. The deal stagnated briefly until December 2024 while further safeguards to address environmental concerns were discussed. Although the agreement was finally signed in January 2026, it encountered another halt at the end of that same month, as the Parliament voted to refer it for an opinion from the Court of Justice of the European Union.
What can explain this sudden increase in speed on the negotiations, after two decades of progressive but slow diplomatic advances? According to Alan Matthews, Professor of European Agricultural Policy in the Department of Economics at Trinity College and former President of the European Association of Agricultural Economists, several factors come into play. “New motives on the EU side apart from the original desire to gain better access to the Mercosur market included concern to counter growing Chinese influence in Latin America”, he explains. Ambitions to obtain access to critical raw materials and the need to lock in trade relationships with other partners after Trump’s “tariff war” have also played a role. As for Mercosur, Matthews points at the political opportunity seized by political leaders in Brazil or Argentina in championing this agreement.
Reactions by the agricultural sector – fear and mistrust
The first reactions to the signing of the Mercosur agreement did not take long to appear. Although some sectors like the dairy or wine ones expressed their firm support for the deal, others have shown their disagreement. “As is always the case in trade deals”, Matthews explains, “those who stand to lose have a stronger incentive to make their voices heard”.
Over the last months, protests have occurred in several EU countries, namely France, Poland, Belgium or Spain. In December, farmers from several member states drove their tractors and gathered in front of the European Parliament to express their discontent. What exactly troubles them about the deal?
Competitiveness, standards and an uneven level playing field
Competition concerns seem to be at the forefront in this regard. Matthews refers to a “sense of unfairness” which has settled amongst European farmers: they see the deal as creating an uneven level playing field. They fear having to now compete not only with other EU products but with Mercosur imports, which might not meet the same quality standards European goods are subject to. The safeguards approved by the Parliament last month, to be triggered if the deal causes injury to the EU agricultural sector, have not been sufficient to quiet the critics. Concerns on quality standards, however, are mitigated by the stringent audits and checks imports are subject to, ensuring that the same health and safety norms in force in the Union are complied with by foreign goods entering its market.
Higher carbon emissions and the EU’s green ambitions
When we turn to animal welfare and environmental standards, the issue becomes more complicated. How can European farmers, bound by these strict rules, compete with products which will not be required to comply with similar norms in their countries of origin? In this sense, as many trade agreements before, the Mercosur deal is likely to act as a tool to raise these standards. But in order for this to work, an incentive to exporting countries must be offered, that is, granting them greater market access. “There is thus a trade-off for EU producers”, argues Matthews.
The other biggest source of ammunition for detractors of the deal is found in its environmental impact. How would facilitating trade from across the Atlantic Ocean fit with the EU green ambitions, more particularly its neutral emissions objective? In a sense, trade agreements will always increase emissions since they entail an increase in economic activity. Nevertheless, the environmental value of the agreement lies elsewhere: by establishing links of cooperation and turning the implementation of the Paris Agreement an essential element of the deal, the EU seeks to align the climate policies of Latin American countries with that of the agreement. According to Matthews, “the positive impacts of the [Mercosur] Agreement on climate ambition in the Mercosur countries will balance the limited increase in emissions due to the Agreement’s impact on the import of beef”.
The EU-Mercosur Agreement is not about absolutes, nor rights or wrongs; as we have seen, the implications of the deal are complex and layered; trade-offs seem to be hinted at in every provision. Now, as the process seems to have come to a halt once again while the EU Court issues its opinion, we spectators can only wait to see how exactly will the Mercosur agreement shape the future of EU trade and agriculture.