EU countries approve Mercosur trade deal
After more than 25 years of intermittent negotiations, EU member states have approved a free-trade agreement with the South American Mercosur bloc, paving the way for the world’s largest free-trade area, covering nearly 780 million people. The decision is seen as a geopolitical success for the European Commission and key supporters such as Germany and Spain, which view the deal as vital for diversifying supply chains and reducing dependence on China. France led an unsuccessful coalition of opposing countries, including Poland, Austria, Hungary, and Ireland, citing concerns over agricultural competitiveness and environmental standards; Italy’s late support proved decisive.
The agreement will eliminate tariffs on over 90% of trade between the EU and Mercosur members Brazil, Argentina, Paraguay, and Uruguay. European markets are expected to see increased imports of agricultural commodities in which Mercosur countries are major global producers, notably beef, poultry, sugar, and ethanol. This is expected to intensify price competition for European farmers, particularly in the beef and poultry sectors. EU farmers argue that strict regulatory requirements on animal welfare, pesticide use, and environmental protection under the EU Green Deal significantly increase production costs. By contrast, producers in Brazil and Argentina often benefit from lower costs due to economies of scale and less stringent regulatory frameworks, creating what European farmers describe as an uneven playing field.
On the positive side, the deal is expected to save European exporters around €4 billion annually in duties and to expand market access for European cars, machinery, and pharmaceuticals. The agreement is scheduled to be formally signed on January 17 in Asunción, Paraguay, but it must still be ratified by the European Parliament, where it is likely to face strong opposition from both right-wing nationalist and left-wing environmental groups.
