By Ansgar Haase
A majority of European Union countries gave the go-ahead to sign the Mercosur free trade deal with Brazil, Argentina, Uruguay and Paraguay, German Chancellor Friedrich Merz welcomed the breakthrough.
A majority of European Union countries gave the go-ahead on Friday for the bloc to sign the Mercosur free trade deal with Brazil, Argentina, Uruguay and Paraguay after decades of negotiations.
At a meeting of representatives from the 27 EU countries in Brussels, a sufficient number of participants agreed to the planned signing of the deal, diplomatic sources told dpa.
The new free trade zone, with more than 700 million inhabitants, will be the largest of its kind in the world, according to the European Commission. The controversial deal has been in the making for more than 25 years.
The final agreement was made possible by last-minute concessions to Europe’s agricultural lobby, which views competition from the four countries – all members of the wider Mercosur South American trading bloc – as a threat to European farmers.
In South America, agricultural products such as beef can be produced more cheaply than in Europe.
The agreement was initially supposed to be signed in Brazil in December. However, the necessary majority of EU member states was not achieved at that time because Italy tied its approval to further support commitments for European farmers.
For the deal to pass it required a so-called qualified majority, meaning at least 15 of the EU’s 27 states representing 65% of the bloc’s population must back it.
Italy’s approval was necessary because two other populous EU countries, France and Poland, oppose the agreement in its current form.
Signal to Donald Trump
The new free trade area is also intended as a signal offsetting US President Donald Trump’s protectionist trade policy. The aim is to dismantle trade and tariff barriers between the EU and the Mercosur states as much as possible.
German industry had been pushing for years for the deal to be concluded.
German Chancellor Friedrich Merz welcomed Friday’s breakthrough as a “milestone in European trade policy and an important signal of our strategic sovereignty and ability to act.”
“With this agreement, we are strengthening our economy and trade relations with our partners in South America – that is good for Germany and for Europe,” he added.
The commission estimates that the agreement could increase annual EU exports to South America by up to 39%, or around €49 billion ($57 billion) – supporting more than 440,000 jobs throughout Europe.
In particular, the automotive industry, mechanical engineering and the pharmaceutical sector stand to benefit. Car imports to Mercosur countries are currently subject to a 35% tariff, for example.
A quarter-century of talks
Negotiations on the Mercosur agreement began back in 1999. The commission finally concluded the talks in December 2024, despite persistent criticism from countries such as France.
Last year, the EU’s trade dispute with the United States brought new momentum to the process. Many countries, and Germany especially, now want to demonstrate that fair trade is not a thing of the past.
“Now it is important to conclude the next free trade agreements quickly,” Merz stressed, noting that 25 years of negotiations had been too long.
However, critics of the deal fear that European farmers could be forced into a merciless price war, while fuelling the destruction of South American rainforest. There are also concerns that strict EU standards on food safety and animal and plant protection could be undermined.
The commission in Brussels firmly denies this, stressing that only products complying with the bloc’s extensive regulations can be imported into the EU.
Safety net for farmers
To counter ongoing farmers’ protests against the planned free trade area, the commission recently drew up additional economic safety clauses.
That includes countermeasures that can be quickly initiated in the event of a harmful increase in imports from the Mercosur states or an excessive fall in prices for EU producers. These would lead to the temporary suspension of trade advantages.
The imports of products including beef, poultry, rice, honey, eggs, garlic, ethanol, citrus fruits and sugar is to be monitored particularly closely. A report on the impact of imports from Brazil, Argentina, Uruguay and Paraguay is to be published at least every six months.
Bolivia, which is now also part of Mercosur, has to adapt its rules before it can benefit from the free trade agreement.
Signing planned in Paraguay
The agreement is now to be signed in Paraguay, which currently holds Mercosur’s rotating presidency. European Commission President Ursula von der Leyen and European Council President António Costa are to attend the signing ceremony.
A written decision based on Friday’s agreement is now required to sign and finalize the trade deal. This is considered a formality, however.
