Just the Facts | Mercosur Update

After 25 years of negotiation, the long-awaited EU- Mercosur trade deal looks to be on the brink of enactment. The deal brings together two of the largest trading blocs in the world and creates a free trade area of over 700 million people, covering more than 20% of global GDP. In this Just the Facts we will be discussing the recent developments with the EU- Mercosur trade deal negotiations and what it means for the agreement going forward. If you missed our previous Just the Facts on Mercosur, you can read it here.

Background

Negotiations between the EU and the Mercosur countries of Argentina, Brazil, Paraguay, Uruguay, and Bolivia first began in 1999. The initial talks were held intermittently between 1999 and 2010, with deadlocks and disagreements delaying progression. Following shifts to pro-business, centre right parties in Brazil and Argentina in 2016, there was renewed interest, and an exchange of new tariff offers was made between the EU and Mercosur. The negotiations gained further momentum coming into the 2020s. Against a backdrop of the official departure of the UK from the EU, the first Trump administration, and a trade war between the US and China, the EU and Mercosur concluded a political agreement on the trade components of the deal in 2019. The EU’s shift in focus towards open strategic autonomy and economic competitiveness led to a re-prioritisation of negotiations in 2023 and 2024. Concern over the growing influence of Chinese firms in South America also fuelled renewed momentum on the EU side for a deal. The context of previous negotiations have framed the current iteration of the EU-Mercosur Partnership Agreement (agreed in December 2024) which is the result of a “delicate rebalancing of EU and Mercosur interests”.  

Since 2024, the agreement gained significant traction and became a priority for the Commission. During this time the agreement came under renewed scrutiny by farming and environmental groups, who view the agreement as having potentially devastating impacts on the EU agrifood sector and on the EU’s climate goals. Within the agrifood sector the main source of contention has been the introduction of a tariff free beef quota, which farmers argue will undercut the price of beef  across the EU and allow animal produce into the EU that does not conform to environmental, animal welfare or food safety rules. France, Italy, Poland, Ireland, Austria and Hungary have all been vocal critics of the deal due to intense lobbying from farming groups within their respective countries. On the environmental side, large-scale deforestation has been highlighted as a major concern with the deal. Civil society groups in Europe and South America have highlighted the risk existing forests and ecosystems will likely face due to the expansion of agricultural land as a result of the agreement. Moreover, civil society groups have claimed the deal is incompatible with the EU’s climate change goals under the Paris Agreement and will endanger indigenous communities.  

What has happened?

The most difficult period of Mercosur’s negotiations have been in the home stretch. In December 2025, Italian Prime Minister Giorgia Meloni requested a postponement of a vote on the deal, scuppering Ursula von der Leyen’s plans for a Christmas signing. Meloni cited outstanding issues relating to agricultural imports as the reason for postponing the agreement. The Italian Prime Minister had sought to provide additional protection for farmers by seeking reciprocity and further safeguards on environmental standards, animal welfare standards and rules on the use of pesticides. Italy did not commit to joining the blocking minority, a move which would have had catastrophic implications for the Commission President and the bloc as a whole, but their position as the last viable member in a potential blocking minority (a blocking minority requires support from at least 4 member states representing 35% of the population) provided the Italian government with significant leverage coming into the new year.

On 9 January, the European Council formally adopted the EU-Mercosur Partnership Agreement (EMPA) and the Interim Trade Agreement (ITA) between the EU and Mercosur. The agreement came on the back of enhanced safeguarding measures, pushed for by Italy. The new measures focused on improving the effectiveness and response time of safeguards in place to strengthen the protection of farmers. Under the new proposal, an investigation into sensitive products can now be launched when a price undercut of 5% is coupled with either a 5% increase in preferential import volumes on a three-year average or a 5% drop in import prices. The previous rate for this was at 8% on sensitive products. A second key element in obtaining a qualified majority was the proposal of early access to €45 billion in CAP funding under the 2028-2034 MFF. The measure would see countries gain access to around two thirds of the of their mid-term allocation immediately. In a letter to the Cyprus Presidency of the Council of the EU, President von der Leyen outlined the plan, saying it would provide an “unprecedented level of support” to farmers.

Having cleared what many thought to be its ultimate political hurdle, the Mercosur deal once again found itself in political trouble. On 22 January the European Parliament voted to refer the trade deal to the EU Court of Justice. The referral was based on whether the legal structure and possible provisional application of the agreement are compatible with existing EU treaties. It involved two considerations. The first question was whether the ITA falls under EU exclusive competence where the EU alone has the power to negotiate and conclude the agreement, or under a “shared competence” where national parliaments must also ratify the agreement . The second motion concerned the “rebalancing mechanism” (clause that allows one side seek correction if the other changes rules in a way that alters the trade benefits they originally agreed) and whether it could present an issue with the EU’s ability to preserve its legal control over environmental, climate, animal-health, pesticide, or food-safety rules. The parliamentary vote on the two court referrals which passed 334 to 324, with 11 abstentions, effectively delays the ratification of the agreement by the Parliament.

Despite the Parliament’s referral of the agreement to the EU Court of Justice, the Commission has said it is planning on provisionally implementing the ITA. In their adoption of the agreement on 9 January, EU member states authorised the Commission to proceed with the ITA, allowing for the deal to be provisionally implemented whilst the case is ongoing. On 5 March, the Council adopted the regulation implementing bilateral safeguard clauses that had been proposed in January, bolstering the agreements protection measures for the agrifood industry. This led to a full ratification of the agreement by Mercosur countries on 17 March, when Paraguay became the final Mercosur member to ratify the agreement.

What now?

The trade only portion of the agreement (the ITA) is currently awaiting formal implementation but is set to become an interim agreement. The Commission has signalled that this could occur as early as the start of May. This came after the College of Commissioners agreed to the necessary procedural steps that would allow the Commission to complete the remaining legal and procedural formalities on 12 March . The interim agreement will remain in effect until final ratification, after which it will be replaced by a comprehensive trade deal and investment agreement.

The EMPA, which is the broader instrument that both trading blocs will use for future dialogue and agreement on commitments, has a lengthier path to completion. The EMPA will have to achieve ratification by all EU member states in order to be implemented. Due to the current disagreement amongst member states on the deal, and the pending legal case against both agreements, it is forecasted that this will be a lengthier process.