EU-Mercosur deal, six months on: winners, losers and the question mark over Europe’s top court
Six months after it began to apply provisionally, the trade agreement between the European Union and Mercosur, made up of Argentina, Brazil, Paraguay and Uruguay, combines projected benefits for both blocs, opposition from part of Europe’s farming sector and a legal question mark: the opinion of the EU Court of Justice on its legality, which could take until early 2028.
Six months after the provisional application of the EU-Mercosur trade agreement, the deal between the European Union and Argentina, Brazil, Paraguay, and Uruguay has both benefits and drawbacks. The interim agreement, signed in January, has been in effect since May, covering trade and investment liberalization. It allows the EU to eliminate tariffs on 91% of Mercosur's imports and grants the EU 92% tariff-free access to Mercosur. The broader Association Agreement must still be ratified by all 27 EU member states.
Supporters of the agreement highlight projected tariff savings of about €4 billion, as well as a market of over 700 million consumers. BBVA Research estimates that bilateral trade will increase by 40% by the end of the 16-year implementation period, benefiting Argentina with a potential GDP boost of up to 0.5% and Brazil by 1.5%.
However, certain sectors in both regions may lose out. In Europe, extensive beef farming, sugar, and bioethanol production could be negatively impacted, while Mercosur's industry and manufacturing sectors may face challenges.
The agreement includes closed quotas for beef and poultry, safeguards if prices drop by more than 5%, and a €45 billion reserve to compensate European farmers. Nonetheless, some argue that these protections "distort the market." A Spanish farming organization, ASAJA, contends that fair competition cannot be assumed while agreements are signed with countries that do not fully adhere to EU standards.
Recently, the EU Commission suspended imports of meat, eggs, and honey from Brazil due to antibiotic use incompatible with EU rules, pending an audit. This demonstrates that protection mechanisms work, according to experts. However, legal uncertainty remains a concern for businesses, as it hinders planning. The Commission's decision to review the deal's legal status through an opinion from the EU Court of Justice, which may take until early 2028, has raised questions about the agreement's future.
Written by urgent.news from MercoPress's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
This story
This is one outlet's version. Read the fullest account.
