EU and Mercosur reach political agreement on groundbreaking partnership

Mercosur is a big market for EU exports and it was until now the only major trading partner in Latin America with which the EU did not have a preferential trade agreement. EU firms exported to the four founding countries of Mercosur:

• €56 billion in goods (in 2023), and
• €28 billion in services (in 2022).

Mercosur’s economies are currently highly protected and European firms face many trade barriers when exporting there, which makes it hard for them to compete under fair conditions. These include:

• high import duties
• burdensome procedures, and
• technical regulations and standards which differ from international standards.

The EU is Mercosur’s second-biggest trade in goods partner, after China and ahead of the United States. The EU accounts for 16.9% of Mercosur’s total trade in 2023. Mercosur is the EU’s tenth-largest trade in goods partner. There is huge potential for EU firms to export even more to this large market of over 273 million people.

The EU already has trade deals in place with nearly all other countries in Latin America. Securing an agreement with the Mercosur countries allows us to further extend preferential access to EU exporters and strengthen our political ties with Latin American countries.

The EU’s partnership agreement with Mercosur will:

• remove trade barriers and make it easier for EU firms to sell goods and services to Mercosur, as well as make it easier to invest;
• help secure sustainable access to raw materials, strengthening our economic security and supporting the twin transition;
• help the EU and Mercosur shape global trade rules in line with highest EU standards;
• send a powerful signal to the world in favour of rules-based trade, rejecting protectionism;
• further integrate value chains between our two regions, thereby helping industries on both sides stay competitive on the global market;
• project our values via detailed obligations on trade and sustainable development, including climate change and labour.

What are the main achievements the agreement will bring?

1. Pursue a value-based trade agenda

Under the agreement, the EU and Mercosur agree to:

• protect labour rights;
• protect the environment, including fighting climate change and deforestation;
• promote corporate social responsibility;
• cooperate on animal welfare standards, biotechnology, food safety and the fight against antimicrobial resistance.

2. Get rid of tariffs

High Mercosur tariffs make European products in Mercosur more expensive. Mercosur imposes high tariffs on imports of European products such as:

• Cars;
• Machinery;
• Information and communications technology equipment;
• Textiles;
• Chocolate;
• Spirits;
• Wine.

By removing these tariffs, the agreement with Mercosur will make it easier for European firms to export to Mercosur countries.

3. Promote trade in other ways

The agreement aims to boost EU exports to Mercosur with provisions on:

• Removing non-tariff barriers to trade in goods;
• Eliminating discriminatory tax treatment on imported goods;
• Facilitating trade in services and establishment in services and manufacturing;
• Opening government procurement;
• Making it easier for Small and Medium Sized Enterprises (SMEs) to trade;
• Improving access to raw materials essential to the EU economy by lowering or removing export taxes and eliminating export restrictions and export monopolies.

4. Show the world that the EU and Mercosur reject protectionism

At a time when protectionist pressures are growing, a partnership agreement between the EU and Mercosur sends a clear signal to the world that two of its largest economies:

• reject protectionism, and
• are open for business and for trade on the basis of fair rules and high standards.

What will the agreement mean for trade in goods?

Mercosur will abolish import tariffs on European goods and remove obstacles to EU exports, such as:

• unnecessarily restrictive rules and regulations that differ from international standards;
• non-automatic import licences;
• burdensome conformity assessment procedures.

Making it easier to export to Mercosur will benefit, in particular, EU firms making and selling:

• Agri-food products;
• Machinery;
• Pharmaceuticals;
• Cars;
• Textiles and clothing.

The more Europe exports, the more jobs it can safeguard and create.

What will the agreement mean for trade in services and investment?

The agreement will make it easier for EU firms to sell their services to Mercosur, both through local establishment and on a cross-border basis.

A wide range of services and manufacturing sectors should benefit, including:

• Business services;
• Financial services;
• Telecommunications;
• Maritime transport;
• Postal and courier services.

The agreement will reduce and eliminate discrimination and expand opportunities for EU and Mercosur service providers and investors.

The agreement will not:

• prevent the EU or Mercosur from continuing to regulate their services markets in a non-discriminatory manner,
• liberalise public services like public healthcare or state-funded education

For both foreign and domestic services suppliers, the agreement will not affect the capacity of regulators to develop and impose non-discriminatory rules and standards:

• protecting health, safety and the environment, as well as consumers;
• ensuring high quality services and services providers;
• guaranteeing labour rights and working conditions.

How will the agreement help European industry?

The agreement will remove import duties on over 91% of EU goods exported to Mercosur. Duties for some products will be liberalised over longer staging periods to allow sufficient time for companies in Mercosur countries to adapt.

Examples of current Mercosur tariffs on such goods are:

• Cars: 35%
• Car parts: 14-18%
• Machinery: 14-20%
• Chemicals: up to 18%
• Clothing: 35%
• Pharmaceuticals: up to 14%
• Leather shoes: 35%

How will the agreement help small businesses?

Trade barriers disproportionately affect smaller businesses more than large companies, because small firms may not have the time and resources to overcome them. This is why the EU has ensured that the Agreement contains a dedicated chapter for small and medium-sized enterprises (SMEs) to address the specific challenges they face in trade and investment activities.

The EU wants the agreement to:

• make Mercosur regulations more transparent;
• simplify Mercosur customs procedures.

Already today, over 30,000 EU SMEs export to Mercosur. By making trade and investment with Mercosur easier, more small businesses will unlock new opportunities and expand their customer base.

How will European consumers benefit?

The agreement will create the conditions for European consumers to choose from a wider and more affordable range of products and services.

How will the agreement benefit the EU’s farming communities?

EU farming communities stand to gain from easier access to the Mercosur market and more opportunities to sell their produce to Mercosur’s 284 million consumers.

Mercosur has great consumer potential for high-quality European products such as wines, cheese, chocolate and pork, which are currently subject to high tariffs.

For example:

• Wine: 27%
• Sparkling wines: 20-35%
• Chocolate: 20%
• Whiskey and other spirits: 20-35%
• Pastries, waffles and biscuits: 18%
• Canned peaches: 55%
• Soft drinks: 20-35%.

The deal will remove these high tariffs and other trade barriers such as unclear rules and regulations or burdensome procedures, so it will be easier for European producers to export to Mercosur.

How will the agreement help EU food and drink producers market their distinctive regional products (Geographical Indications)?

The EU produces many unique high-quality regional food and drink products like Prosciutto di Parma, Parmigiano Reggiano, Prosecco, and Irish whiskey, protected under a special status called ‘Geographical Indications’ (GIs). GIs ensure authenticity, enable premium pricing, and prohibit imitation products.

The Mercosur deal will recognize 350 European GIs, banning imitations as well as misleading terms, symbols, flags or images. Only genuine products, such as, for example, Roquefort cheese made in Roquefort, France, will carry the GI name. This protection benefits EU producers, supports exports, and assures Mercosur consumers of product authenticity.

How will the agreement open up Mercosur’s government procurement market?

The agreement will make it easier for European firms to bid for government contracts in Mercosur countries on equal terms with local companies. This means that the tendering for contracts procedure will be simpler, more transparent, and less discriminatory for EU companies.

Will the agreement promote political dialogue?

The new agreement will enhance political dialogue and increase cooperation in areas such as migration, digital economy, research and education, human rights, including the rights of indigenous people, corporate and social responsibility, environment protection, ocean governance, as well as fight against terrorism, money laundering and cybercrime.

What sort of exporting and investing challenges do EU firms currently face in the Mercosur region, which a partnership agreement could help to address?

The Mercosur market is large, but highly protected. European firms often face difficulties to export there, such as:

• high Mercosur tariffs on most products;
• the cost of meeting Mercosur’s rules and regulations, which often differ from international standards;
• unnecessarily complex procedures to prove that EU products meet Mercosur’s technical requirements or standards for food safety or animal and plant health;
• limited access for EU businesses and an unequal playing field in key service industries;
• preference given to domestic firms and goods over foreign firms and goods in government contracts;
• lack of easy access to information on how to do business in Mercosur countries, especially for SMEs.

How will the agreement protect European standards, including food safety standards?

The EU’s sanitary and phytosanitary (SPS) standards are non-negotiable and are not affected by this partnership agreement or any other trade agreement. The decisions that the EU takes to protect its production and its consumers from imported products are underpinned by risk assessments, which are performed by the European Food Safety Authority.

• EU stringent SPS standards will not change
  • The agreement does not affect or undermine EU sanitary and SPS standards because these are not negotiable, including on genetically modified organisms (GMOs);
  • The EU maintains its right to set maximum levels of residues for pesticides, veterinary medicines or contaminants.

• The EU remains free to regulate food safety
  • The EU remains fully independent in regulating new SPS standards in the interest of EU citizens’ health;
  • The agreement includes the ‘precautionary principle’, allowing us to take measures to protect the health of EU citizens when the scientific evidence on whether imported food is safe or not is inconclusive. This is expressly mentioned in the chapter on trade and sustainable development.

• All imported food must comply with the EU’s sanitary and phytosanitary standards
  • EU rules apply to all products sold in the EU, whether produced domestically or imported;
  • Our robust system of checks allows us to make sure that EU rules are respected.

Thanks to the agreement, the EU and Mercosur will work more closely with each other, including in the international standard-setting bodies.

How will the agreement help promote sustainable farming in both regions?

• The EU and Mercosur have agreed to cooperate more closely to raise animal welfare standards.
• The partners have agreed to fight together against antimicrobial resistance linked to the use of antimicrobials in humans and animals – a first for an EU agreement.
• It was also agreed to cooperate in the scientific arena to ensure a high level of food safety and health protection.
• The agreement includes commitments to ensure that forests are managed sustainably, to combat illegal logging and related trade.

How will the agreement protect sensitive EU agricultural products?

The agreement opens up the EU market to goods from Mercosur, but limits imports from Mercosur of sensitive agricultural products such as beef, ethanol, pork, honey, sugar and poultry. This strikes the right balance.

More information is available in the factsheet.

How will the agreement uphold workers’ rights and sustainability in the EU and Mercosur?

The EU and Mercosur have agreed that the deal must support existing climate and environmental standards and labour rights, and not lower or dilute them. The agreement prohibits either side from unduly encouraging trade and investment by derogations from or not enforcing environmental and labour laws. Both sides have strong laws protecting workers’ rights and have also agreed to ensure that core labour rights as defined by the International Labour Organisation (ILO) are respected. These concern:

• Non-discrimination at work,
• Elimination of child labour and forced labour,
• Freedom of association and the right to collective bargaining,
• Commitments on labour inspection and on health and safety at work.

In addition, the agreement contains commitments on sustainable fisheries and sustainable forest management, among others. Under the agreement, the EU and Mercosur commit to effectively implementing the United Nations Framework Convention and the Paris Agreement on climate change. The deal will also open opportunities for supply chains of products that are produced in a way that helps conserve the environment, such as Brazil nuts from natural forests.

Will the commitments on workers’ rights and environmental protection be enforceable?

The commitments set out in the section on Trade and Sustainable Development will be enforceable through a dispute settlement mechanism that includes:

• external review by an independent panel of experts,
• a role for civil society, including representatives of employers and trade unions, at all stages,
• calling on the expertise of international bodies such as the International Labour Organization.

How will the agreement safeguard governments’ right to regulate in the public interest?

The agreement will not affect the right of the EU or Mercosur to regulate for public policy objectives such as protecting public, animal and plant life or health, as well as the environment, workers or to provide public services.

Like all EU partnership and trade deals, the EU-Mercosur Agreement leaves governments on both sides entirely free to manage water distribution or other essential services as they see fit. They continue to choose whether such services are part of the public or the private sector.

The agreement will enable the EU and Mercosur to work together on some regulatory issues – on a voluntary basis. Cooperation will only apply to EU laws that affect trade or investment. It will not include EU Member States’ laws.

What will Mercosur get from the deal?

It will become easier for Mercosur to export to the EU, provided they respect EU high standards on sustainability, health and food safety.

The deal will also help integrate Mercosur industries into the EU’s highly innovative value chains. This in turn will help them become more competitive. Mercosur countries want to rely less on exports of commodities and to diversify their economies by producing higher value goods and services. The agreement will help them doing so.

The trade deal will give more opportunities for Mercosur citizens to be able to provide their services in the EU, including on a temporary basis through their physical presence in EU countries, including through business contracts or as independent professionals.

With the agreement, governments in Mercosur are committing to make it easier and simpler to do business in their countries by improving the business climate. They will do so via more predictable and transparent procedures and regulations and by providing enhanced access to their market. This will help them attract more investment from Europe, as well as the rest of the world.

Both the EU and Mercosur want to:

• shape global trade rules in line with their standards and shared values of democracy and rule of law, and
• send a powerful signal to the world that two of its biggest economies reject protectionism.

How will the agreement facilitate the green and digital transition in Mercosur countries?

As part of EU-LAC Global Gateway Investment Agenda, an enhanced cooperation fund of €1.8 billion will support amongst others:

• Investments in the development of new sustainable forest value chains, for example in the Amazon.
• The adaptation of Mercosur economic actors, particularly Micro, Small and Medium Entreprises (MSMEs), women, smallholding farmers, indigenous peoples and traditional communities, to the new economic and trade environment generated by the EU-Mercosur Partnership Agreement.
• Capacity building for implementation of environmental and labour laws.
• Investments in renewable energy and added value creation, for example in critical raw materials, including upstream processing and battery production.

When did the negotiations start?

The negotiations were launched on 28 June 1999. Following a suspension of talks, negotiations restarted in 2010. The longstanding negotiations gained new impetus in 2016, and the European Union and Mercosur concluded the negotiations in 2019 following new offers to cut tariffs. Finally, on 6 December 2024, the EU and Mercosur reached a political agreement as to further improve the agreement and address concerns related to sustainable development.

The political agreement achieved an ambitious, balanced and comprehensive partnership agreement. The new trade framework – part of a wider Association Agreement between the two regions – will consolidate a strategic political and economic partnership.

What is different from the 2019 agreement?

• The new EU-Mercosur deal is one of the most ambitious agreements in terms of sustainability. This deal will reflect the latest EU standards on Trade and Sustainable Development, and will even go beyond some of our most recent agreements, such as the EU-Chile agreement or the EU-Canada Comprehensive Economic and Trade Agreement (CETA).
• In addition to the 2019 negotiated text, the new deal will make the Paris Agreement an essential element of the EU-Mercosur relationship. This will ensure that the agreement can be suspended in case one of the parties is in serious breach of the Paris agreement or decides to walk out of it.
• It will also ensure concrete commitments to halt deforestation by 2030, in line with the National Determined contributions under the Paris agreement.
• A fund of €1.8 billion of EU support will facilitate mutually beneficial actions for the fair green and digital transition in Mercosur countries, as part of Global Gateway. This will ensure the development of local industries, equipping Mercosur’s countries with the necessary industrial capabilities to face future challenges.
• Moreover, the new deal contains new provisions on public procurement, export duties and vehicles.

How much control do elected governments and MEPs have over the whole process?

The European Commission negotiated on behalf of the EU in line with a mandate granted to it by the governments of the EU’s 27 Member States.

The Commission has always ensured that the negotiation process is accountable to EU Member States and to the European Parliament.

The EU Commissioners concerned as well as the Commission negotiators and services:

• work together with EU Member States to prepare the negotiations and negotiating texts;
• report back to Member States meeting in the Council on how the negotiations are going;
• keep the European Parliament updated of developments;
• and appear before the European Parliament’s International Trade Committee.

The European Parliament also set up a special Monitoring Group to follow the negotiations. The Commission has regularly reported on the state of play of the negotiations to this group, as well as to the European Parliament Delegations responsible for relations with Mercosur and Brazil.

Has the Commission evaluated the impact that this agreement could have on the EU and Mercosur?

Since negotiations started, the Commission has conducted several studies on the potential impact of an agreement with Mercosur.

In 2021, the Commission published a Sustainability Impact Assessment on the potential economic, social, environmental and human rights impact of the trade part of the association agreement between the European Union and the Mercosur countries. According to the report, the agreement will have a positive impact on the economies of both the EU and the Mercosur countries, raising wages and contributing to inequality reduction. At the same time, the impact on sensitive agri-food sectors in the EU would be limited.

In 2024, the Commission published a study that investigated the potential effects of 10 upcoming free trade agreements under the current EU trade agenda. The study confirmed that the analysed FTAs have the potential to benefit the EU agri-food sector, especially the dairy, pigmeat, processed food and beverages sectors. It also highlights the vulnerability of the beef, sheep meat, poultry meat, sugar and rice sectors.

Work is currently underway on a new a Trade Sustainability Impact Assessment (SIA) evaluating the economic, social, environmental and human rights impact of an agreement between the EU and Mercosur.

A number of roundtable events and civil society dialogues have been held in Brussels and in Mercosur countries. The comments made in these discussions have into the work on the report and has informed the negotiation process.

How did the Commission ensure that it listened to everyone with a stake in the agreement?

The Commission regularly reports back to the governments of the EU’s Member States and keeps the European Parliament informed of progress in the negotiations, via meetings of INTA, dedicated monitoring groups, and by providing the state of play in at least 40 bilateral meetings with individual MEPs or political groups.

The European Commission has also held numerous meetings with representatives of many of the 460+ civil society organisations registered within its ongoing dialogue on trade policy.

These EU-based, not-for-profit organisations include:

• trade unions,
• consumer bodies,
• employers’ federations,
• business federations,
• farming organisations,
• environmental organisations,
• animal welfare organisations,
• faith-based groups,
• think tanks,
• community-based groups.

These meetings enable a wide range of bodies to make their views heard and to comment on the negotiations. At the meetings, the Commission informs and updates civil society on the negotiations.

Since 2015, the European Commission has made public all new negotiating papers tabled in the talks.

The European Commission’s doors are always open. Any organisation interested in the talks can meet officials and put forward their views and opinions.

What are the next steps now that technical discussions have finished?

On the EU side, the text of the agreement was published on the European Commission website, and it will also be:

• checked by lawyer-linguists;
• translated into all official EU languages.

Once these steps will be concluded, the Commission will transmit a proposal to the Council and the Parliament for signature and conclusion of the agreement.

The legal basis of any final EU-Mercosur agreement will be determined after an assessment of the outcome of the negotiations. This will be reflected in the Commission’s proposal when it submits the agreement for ratification to the Council and European Parliament.

The following main eligible models have been used in recent agreements:

i) a “mixed agreement” that requires the approval by the EU and all its Member States on the whole agreement before it can fully enter into force ; and ii) a single political package of two legally separated agreements that are ideally to be signed in parallel: one “mixed” framework agreement, again requiring the approval by the EU and all its Member States before it can fully enter into force, and an interim agreement covering provisions falling under the exclusive competence of the EU, which would only require ratification on the part of the EU.

Source – EU Commission