An update on the economic, sustainability and regulatory effects of the trade part of the EU-Mercosur Partnership Agreement

This report assesses the economic, sustainability and regulatory effects of the trade part of the EU-Mercosur Partnership Agreement (EUMETA), with a focus on developments between the 2019 and 2024 revisions of the agreement. In our assessment, the macroeconomic effects of the agreement remain positive albeit moderate, with most of the gains concentrated in the EU industry. Developments since the 2019 and 2024 iterations of the EUMETA have significantly reduced sustainability-related risks. On the EU side, a suite of unilateral measures reinforces deforestation-free product standards, thereby mitigating potential climate effects, and bolsters labour rights across international value chains, independently of any trade agreement. Meanwhile, CO2 emissions in Mercosur countries have fallen and deforestation rates have declined. Against the backdrop of escalating global trade tensions, the economic and political benefits of EUMETA appear to outweigh the remaining risks. These risks are being managed both through safeguards built into EUMETA and through an array of other instruments beyond the agreement (agricultural support fund and unilateral sustainability measures.