The EU has announced a trade deal with South America’s Mercosur bloc, which includes Brazil, Argentina, Paraguay, and Uruguay.
European Commission President Ursula von der Leyen confirmed the deal in Montevideo, Uruguay’s capital today (6 December).
In a press statement, von der Leyen said the “political agreement” was “not just an economic opportunity, it is a political necessity”, as the globe “heads towards isolation and fragmentation”.
She added it was “a win for Europe”, arguing 60,000 companies in the EU would benefit from “reduced tariffs, simpler customs procedures and preferential access to some critical raw materials. This will create huge business opportunities”.
The trade deal, which will need to be ratified by member nations, would bring “more jobs – and good jobs – more choices and better prices”, von der Leyen said, as well as boost investments into both blocs and “forming a market of over 700 million consumers”.
In a post on X, Santiago Peña, Paraguay’s President, described the deal as a “historic agreement for our region”.
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By GlobalData
The European Council and European Parliament and a majority of EU member states must approve the agreement before it can be entered into law.
Talks to establish a trade deal between the EU and Mercosur have been ongoing for more than two decades. An agreement was signed in 2019 but opposition from EU member states including Ireland and, more recently France, has made it tricky to settle a final deal.
The agreement also “includes robust safeguards” that “protect” farmers’ “livelihoods”, said von der Leyen.
Farmer protests in France earlier this year threatened the penning of the deal. Farmers argued they faced falling incomes, environmental regulations, rising red tape, and competition from imports.
In November, French retail major Carrefour‘s CEO Alexandre Bompard shared a letter on LinkedIn pledging not to source meat from the trading group, which promptly resulted in backlash from Brazilian industry groups.
Bompard has since sought to calm the tension by apologising for his remarks.
Trade of agri-food products between the EU and Mercosur countries was valued at more than €25bn ($26.39bn) in 2023, according to ING bank senior economist Thijs Geijer.
In a post on LinkedIn today, Geijer noted the food and drinks industry contains “both fierce opponents (including European cattle and poultry farmers) and proponents (including the dairy sector, beer brewers, winemakers)”.
He added: “Within the EU, the deal will lead to a lot of discussion; whether the built-in safeguards will convince all opponents is doubtful.”
Mixed reaction
The EU-Mercosur deal has received a mixed response. Copa-Cogeca, the pan-EU farming lobby body, said the agreement “would have profound consequences for family farming across Europe” and called for protests in Brussels on Monday.
Cogeca president Lennart Nilsson added, “EU farmers and agri-cooperatives are not opposed to trade but advocate for agreements that are fair, balanced, and environmentally sustainable. The current EU-Mercosur agreement fails to meet these criteria, using the agricultural sector as a bargaining chip to benefit other industries.”
The European Dairy Association (EDA) welcomed the deal. “. So far, dairy trade has mainly taken place within the Mercosur region. The cheese and powder imports from the EU have not reached a significant volume. But this is where opportunities lie,” the EDA said. “The signing of this deal will allow both parties to work on the final implementation and secure unhindered access for our European dairy exports, including the reduction and abolishment of tariffs as well as non-tariff barriers.”
Trade associations in the wine and spirits sector view the agreement favourably.
Trade group SpiritsEurope director general Ulrich Adam said: “For the EU spirits sector, it promises significant benefits, including tariff elimination, trade facilitation, increased regulatory cooperation and strong protection of Geographical Indications.”
Trade and economic affairs director at the trade association Pauline Bastion added: “It will lead to the elimination of tariffs, reduction of trade barriers and unnecessary costs, and increase our members’ ability to trade with and invest in the Mercosur region and to support rural communities in Europe.”
Wine trade association Comité Européen des Entreprises Vins issued a statement yesterday calling on the EU and Mercosur to “finalise and swiftly ratify” the agreement.
“In these challenging times, the agreement represents a vital opportunity for the European wine companies to access new markets and attract more wine consumers,” Mauricio González-Gordon, the president of CEEV, said.
The move has also been praised by The International Meat Trade Association, which said on LinkedIn it “welcomes” the deal. “It has been long-awaited and we look forward to its successful implementation in the near future,” the organisation added.
Pierre-Jean Sol Brasier, a campaigner at environmental NGO Fern, was critical, arguing the deal “perpetuates the extractivist model in mining and agriculture – the two biggest drivers of forest destruction and land grabs in South America”.
Saskia Bricmont, Greens-European Free Alliance (EFA) MEP echoed similar statements in an official statement, noting her party “rejected” the deal.
“It was alongside the far-right Argentine President, Javier Milei, that Ursula von der Leyen sealed the EU-Mercosur agreement which meets neither the needs of Europeans nor those of the citizens of Mercosur countries…
“Clearly, the concerns expressed by the European agricultural world, job creation, the protection of social rights, health or even forests in Mercosur countries are not priorities for the President of the European Commission. She seems above all to be interested in potential outlets for industries that, for a long time, preferred to distribute dividends rather than invest in the ecological transition.
“As the Greens-EFA group, we will continue to denounce this free trade agreement that is incompatible with climate objectives, the Green Deal and a model of Sustainable Trade and Development.”
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