After 25 years of negotiations
EU countries agree Mercosur free trade agreement to
Negotiations have been going on for decades: the way is now clear for the controversial EU free trade agreement with the Mercosur states Brazil, Argentina, Uruguay and Paraguay. At a meeting of representatives of the EU countries there was the necessary majority.
After more than 25 years of negotiations, EU countries have agreed to conclude a free trade agreement with the South American Mercosur countries Argentina, Brazil, Paraguay and Uruguay.
The majority of EU ambassadors from the 27 member states voted in favor of the agreement. Bolivia now also belongs to the Mercosur alliance. However, the country still has to adapt rules before it can benefit from the free trade agreement. According to the EU Commission, the new free trade zone with more than 700 million inhabitants will be the largest of its kind in the world.
Concessions to European farmers
The agreement on the controversial agreement was made possible by further concessions to the agricultural lobby. This sees competition from the Mercosur states as a threat to the existence of European agriculture.
In South America, agricultural products such as beef can be produced more cheaply than in Europe. The agreement should actually have been signed in Brazil shortly before Christmas. However, the necessary majority in the Council of EU Member States was not yet achieved at that time because Italy tied its approval to further promises of support to European farmers.
Italy’s yes was necessary because France and Poland, two other large EU states, reject the agreement in its current form.
Approval of the EU Parliament is required
However, the European Parliament must then approve the agreement. It is uncertain whether there is a majority in favor of this. Parliament is also considering asking the European Court of Justice for an opinion on the legal compatibility of the agreement. Such a move could delay the process for months or even years.
Sign to Donald Trump
The new free trade zone is also intended to send a signal against US President Donald Trump’s protectionist tariff policy. The plan is to largely reduce tariffs and trade barriers between the EU and the Mercosur states. German industry has been pushing for the agreement to be concluded for years. The EU Commission estimates that the agreement can increase annual exports to South America by up to 39 percent (49 billion euros) – supporting more than 440,000 jobs across Europe.
Particularly great opportunities are seen for the automotive industry, mechanical engineering and the pharmaceutical industry. For example, a tariff of 35 percent is currently due on car imports into the Mercosur countries.
Negotiations continued Quarter century
Negotiations on the Mercosur agreement had already started in 1999. The EU Commission then concluded it in December 2024 despite ongoing criticism from countries such as France. Most recently, the EU’s customs dispute with the USA brought new dynamics to the process. Many countries now want to show that the days of fair trade are not over – Germany in particular is one of them.
Critics of the agreement, however, fear that European farmers could be forced into a merciless price war and that the destruction of the rainforest in South America will be fueled. It also claims that the EU’s strict standards for food safety and animal and plant protection could be undermined. The EU Commission firmly rejects this and emphasizes that only products that comply with the extensive European regulations are allowed to be imported into the EU.
Signing in Paraguay
The agreement is now to be signed in Paraguay, which currently holds the rotating presidency of the confederation of states. From the EU, Commission President Ursula von der Leyen and Council President António Costa want to travel to the South American country. After the agreement, a written decision is still needed to sign and conclude the agreement. However, this is considered a formality.
German business is pleased
The German economy reacted with relief to the agreement: “The adoption of Mercosur is an important success for the German and European economy,” said the managing director of the Federation of German Industries (BDI), Tanja Gönner. The agreement proves that the EU can be a relevant geostrategic actor.
