The European Commission and Mercosur countries announced on Friday the conclusion of a free trade agreement. This deal, covering 780 million people, will still require approval by all EU member states.
More than twenty years after the start of negotiations, the European Union and the Mercosur countries—Argentina, Brazil, Paraguay, and Uruguay—have finalized the agreement. European Commission President Ursula von der Leyen announced the news from a summit in Uruguay, hailing it as an “ambitious and balanced agreement.”
“Today marks a truly historic milestone,” von der Leyen said, emphasizing that it is “not only an economic opportunity but a political necessity.” Speaking for Mercosur, Uruguay’s President Luis Lacalle Pou called the deal “an opportunity,” stating that prosperity requires effort, not “magic solutions.”
Negotiators from both sides gathered in Montevideo to finalize the agreement. Although a major step, the deal now faces scrutiny and approval from the EU’s 27 member states.
Challenges and Opportunities Ahead
France has led opposition efforts, lobbying other EU members to block the deal. Poland has officially joined this coalition, while Italy conditioned its support on guarantees for farmers. The positions of Ireland, the Netherlands, and Austria remain uncertain.
A Commission spokesperson clarified that the agreement represents “a first stage before a long process.” Supporters, including Germany and Spain, highlight economic opportunities and the chance to counter China’s growing influence in Latin America. German Chancellor Olaf Scholz celebrated the deal on X, calling it a move toward “more growth and competitiveness.” Spanish Prime Minister Pedro Sanchez pledged to work for its approval, citing the benefits of increased trade ties with Latin America.
Approval also requires the European Parliament’s consent. The European People’s Party (EPP), the largest parliamentary group, welcomed the deal as a “historic milestone,” underscoring shared values between the two regions.
To address past objections, especially from France, the revised agreement includes environmental safeguards as essential elements. Binding commitments to combat illegal deforestation in Mercosur countries were added. A senior Commission official noted that these measures allow for suspensions if environmental standards are not upheld.
The agreement will eliminate tariffs on European goods like wine, cheese, spirits, chocolate, cars, and clothing. Limited quotas have been imposed on sensitive products like beef, poultry, and sugar. For example, beef imports will be capped at 90,000 tonnes annually, approximately 1.6% of total EU production, phased in over seven years. Safeguards will address any market disruptions in Europe.
French officials acknowledged that certain sectors, such as wine, could benefit significantly. French wine exports have been struggling in recent years, making the agreement a potential lifeline.
The timing of the agreement challenges French President Emmanuel Macron, who strongly opposes the deal. It arrives as he navigates the fallout of his government’s collapse and the task of appointing a new prime minister.