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EU-Mercosur Partnership Agreement

In “A global Europe: Leveraging our power and partnerships”

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Background and state of play

On 6 December 2024, a new agreement in principle was reached between the EU and the four founding members of the Common Market of the South (Mercosur/l) – Argentina, Brazil, Paraguay, and Uruguay –  on the trade pillar of a comprehensive agreement that includes political dialogue and cooperation and is now referred to as the EU-Mercosur Partnership Agreement. Negotiations on a bi-regional agreement started in 2000 based on 1999 Council negotiating guidelines. The first agreement in principle reached on 28 June 2019 sparked significant stakeholder concerns. To address them, the parties engaged in additional negotiations between March 2023 and December 2024. Following legal scrubbing and translation of the agreement, the European Commission will, roughly by mid-2025, submit proposals for Council decisions to sign and conclude the EU-Mercosur Partnership Agreement under one of several possible ratification scenarios. 

Currently, EU-Mercosur relations are governed by the 1995 Interregional Framework Cooperation Agreement that does not include a free trade agreement (FTA) allowing for preferential treatment. Therefore, EU trade relations with Mercosur are conducted under WTO most favoured nations (MFN) conditions, with a considerable number of tariff peaks on both sides and non-tariff barriers (NTBs) hampering trade. In 2023, total EU-Mercosur trade in goods amounted to €109 billion.

If ratified, the FTA would establish the largest free trade zone the EU has ever created, covering a population of almost 720 million and consolidating the close historic, economic and cultural ties between the two regions. The agreement has a significant geopolitical relevance and economic security dimension in terms of the EU objective of creating resilient supply chains and securing access to critical raw materials for the green and digital transitions. It would also be a strong sign in support of multilateralism and against power politics in trade. 

The FTA would eliminate customs duties on 91% of EU goods exports to Mercosur. Mercosur would remove gradually high import duties on industrial products from the EU such as cars, car parts, machinery, chemicals, etc. Import duties on EU agri-food exports such as wine, spirits, soft drinks, chocolate etc. would be eliminated progressively. The EU would remove import duties on 92% of Mercosur exports to the EU. However, for sensitive agricultural goods limited tariff rate quotas (TRQs), in-quota duties and long staging periods as well as bilateral safeguards were incorporated. According to a 2024 European Commission cumulative impact assessment, EU agricultural subsectors would be affected to different degrees by the envisaged opening of the EU market for Mercosur agricultural imports. The FTA would also protect more than 350 of the EU's geographical indications (GIs) on the Mercosur market.

The additional negotiations have resulted in an annex to the FTA's trade and sustainable development (TSD) chapter that contains a commitment to preventing further deforestation and enhancing efforts to stabilize or increase forest cover from 2030 as well as several innovative initiatives for cooperation to foster sustainable trade. The Paris Agreement is now an 'essential element' of the agreement allowing for the partial or full suspension of the agreement. Moreover, the Mercosur countries would open their government procurement market to EU companies, including at regional level with few exceptions for Brazil. In exchange for stronger sustainability commitments made by Mercosur and to respond to its concerns about the impact of EU autonomous trade measures, such as the EU deforestation regulation, on its agri-food exports to the EU, a non-violation complaint mechanism was included in the FTA that mirrors the related WTO mechanism.

Stakeholder views

While the agreement in principle has been highly welcomed by many EU industrial associations and agricultural associations with offensive interests, it has also prompted significant criticism. Some EU agricultural associations with defensive interests have been outspoken in their negative assessment of the FTA. Civil society groups have expressed their strong opposition to the FTA arguing that it would foster large-scale deforestation and an expansion of agricultural land for cattle raising and soybean planting in the Mercosur countries, which would be incompatible with the EU climate change goals under the Paris Agreement and would also have serious implications for indigenous people.

Position of the European Parliament

In its resolution of 7 October 2020 on the implementation of the common commercial policy – annual report 2018, the European Parliament emphasized that 'the EU-Mercosur agreement cannot be ratified as it stands.’ In its resolution of 16 February 2023 on an EU strategy to boost industrial competitiveness, trade and quality jobs, it stressed that an EU strategy to boost industrial competitiveness, trade and quality jobs ‘also includes ratifying the outstanding bilateral agreement with Mercosur, provided that pre-ratification commitments on climate change, deforestation and other concerns are satisfactory’.

European Parliament follow up

On 23 October 2023, Parliament's Committee on International Trade (INTA) held an exchange of views with the Commission on the ongoing negotiations with Mercosur. On 28 November 2023, the Committee on Agriculture and Rural Development (AGRI) followed suit. On 3 December 2024, INTA held a related debate with the Commission. On 9 December 2024, Parliament's Delegation for relations with Mercosur (D-MER) held a related exchange with Parlasur Members. On 16 January 2025, INTA held an exchange with Commissioner Šefčovič on the EU-Mercosur agreement. On 30. January 2025, AGRI held a related exchange with Commissioners Hansen and Šefčovič. D-MER will discuss the deal again on 6 March 2025.

References:

Further reading:

Author: Gisela Grieger, Members' Research Service, legislative-train@europarl.europa.eu

As of 20/02/2025.