EU-Mercosur trade pact clears ambassadors’ hurdle; signing eyed in Paraguay next week

Brussels — A majority of the European Union’s 27 member states backed the long‑stalled EU‑Mercosur trade pact at an ambassadors’ meeting in Brussels, paving the way for a formal signing in Paraguay next week. If inked, the deal would reshape trade between the bloc and South America’s Mercosur bloc, home to Argentina, Brazil, Paraguay and Uruguay.

what happened

After more than two decades of negotiations, ministers and diplomats endorsed the agreement at the ambassador level, signaling broad support across the bloc. The arrangement would dramatically expand a free trade area that now encompasses more than 700 million people and would eliminate import duties on more than 90% of products moving between the EU and Mercosur members.

Despite the broad backing, the commission that negotiated the text faced minority resistance from several member states. France,Ireland,Poland,Hungary and Austria voted against the accord in the recent review process. Italy, which had earlier sought and secured a last‑minute postponement, ultimately aligned with supporters.

Who supported and who opposed

support for the deal came from major European economies including Germany and Spain, with European officials arguing the pact would bolster industry facing stiff competition from China and U.S. tariffs. German Chancellor Friedrich Merz called the agreement a milestone for European trade policy and sovereignty.

Opposition centered on concerns that farm production, notably meat, sugar, rice, honey and soy from Mercosur members, would outprice European farmers. French officials and farming groups led the push against the pact, citing potential damage to the farming sector. Protests by farmers in Paris and road blockades in Belgium underscored the political sensitivities surrounding the accord.

Italy’s late shift to back the deal helped tip the balance, with Prime Minister Giorgia Meloni stressing cautious optimism about the path forward.

Economic impact and safeguards

Proponents say the agreement would unlock a vast market and boost EU exports,notably in vehicles,machinery,wines and spirits to Latin America. the European Union estimates the pact coudl save EU businesses about four billion euros per year in duties and strengthen agri‑food exports to South America by roughly 50 percent. In addition, the treaty would shield more than 340 iconic european products—from Greek feta to French champagne—from imitation imports.

To ease farmer concerns, negotiators included a 6.3‑billion‑euro crisis fund and mechanisms to suspend preferential tariffs on agricultural products if a surge in imports becomes damaging.Later concessions lowered the threshold for triggering these safeguards, addressing one of Italy’s key demands.

Analysts also highlight a broader strategic aim: diversifying trade away from reliance on a single market and reducing dependence on China for critical raw materials.

Next steps

The pact still requires approval from the European Parliament before it can take full effect. If Parliament signs on, a formal signing ceremony is anticipated in Paraguay in the coming days, marking a major milestone in a negotiation that stretched over more than 25 years.

Key facts at a glance

Topic	Details
Parties	European Union and Mercosur members (Argentina, Brazil, Paraguay, Uruguay)
Market size	Over 700 million people
Tariff removal	More than 90% of products
Annual duty savings (EU outlook)	Approximately 4 billion euros
Growth in EU exports	Significant boosts in vehicles, machinery, wines and spirits
Protection for European products	Protection for over 340 iconic items (e.g., feta, champagne)
Safeguards	6.3 billion euro crisis fund; suspension mechanisms for tariffs
Next major step	European Parliament approval; signing in Paraguay

evergreen insights

beyond its immediate trade effects, the EU‑Mercosur pact represents a broader push to diversify European trade links in a volatile global landscape. For supporters, the agreement signals resilience against tariff wars and a strategic pivot toward a multipolar trading framework.Critics warn that agri‑food competition could test political stability in several member states, especially if safeguards prove insufficient during sudden import surges.

Looking ahead,the pact could influence agricultural policy debates,regional diplomacy,and the EU’s long‑term approach to supply chains for key materials. The balance between market access and farm livelihoods will likely shape discussions in the European Parliament and national capitals in the months to come.

readers’ questions

What is your view on opening new trade routes with Mercosur while protecting European farmers? Do the safeguards sufficiently address concerns about agricultural competition?

Which sectors do you believe will benefit most from this agreement, and which might require even stronger protections?

Join the conversation

Share your thoughts in the comments below or vote in our poll: Is the EU‑Mercosur pact a strategic necessity or a risk to domestic farming?

EU Gives Green Light to Mercosur Trade Deal as France Leads Opposition, Signing Set for Paraguay

1. What the EU‑Mercosur agreement Covers

Tariff reductions: Immediate elimination of duties on over 90 % of industrial goods; gradual phase‑out for agricultural products such as beef,pork and dairy.
Services market: Mutual recognition of professional qualifications and expanded access for EU financial services in Mercosur states.
Sustainable advancement clause: commitment to the Paris Agreement, with quarterly reporting on deforestation, carbon emissions and labor standards.
Rules of origin: Minimum 35 % regional content for goods to qualify for preferential treatment, preventing “third‑country routing.”

Source: european Commission trade Directorate, “EU‑mercosur Agreement – Final text” (2025).

2.Political Drivers Behind the Green Light

Actor	Position	Primary Concern
European Council	Approved the political agreement (Nov 2025)	Boost EU export competitiveness and diversify supply chains
European Parliament (majority)	Ratified the deal (Jan 2026)	Strengthen geopolitical ties with South America
France	Leading opposition, especially in the National Assembly	Environmental impact on Amazon rainforest and French agricultural sector

– France’s stance: The French Ministry of Ecology warned that the deal could incentivize deforestation unless stringent safeguards are enforced.

EU compromise: Added a “green safeguard” mechanism that allows temporary suspension of tariff reductions if deforestation exceeds 0.5 % above baseline levels (tracked via satellite).

3. Paraguay’s Role as the Signing Venue

Strategic location: Landlocked but politically neutral, Paraguay hosts the “Asunción Summit” where EU and Mercosur heads of state will sign the treaty on 15 February 2026.
Infrastructure upgrades: Paraguay invested €250 million in customs IT systems to ensure real‑time data exchange with EU customs authorities.

Reference: Paraguayan Ministry of Foreign Affairs, Press Release (Dec 2025).

4. Economic Impact forecast

EU exporters

Expected increase of €12 billion in annual exports to Mercosur, driven by automotive parts, machinery, and pharmaceuticals.
Mercosur exporters
Projected boost of €9 billion in EU market sales, particularly for soy‑based products, beef, and wine.
Job creation
EU: ~150 000 new jobs in logistics, compliance and agribusiness.
Mercosur: ~200 000 jobs, mainly in processing plants and export services.

Data source: OECD Trade Forecasts 2025‑2027.

5. Key Benefits for Stakeholders

Manufacturers: Lower input costs for EU carmakers using Argentine steel; Mercosur textile firms gain cheaper access to EU synthetic fibers.
SMEs: Simplified customs procedures through the EU‑Mercosur “single window” portal, reducing clearance time from 5 days to under 24 hours.
Investors: New investment protection clauses encourage €3 billion in EU‑directed FDI into Brazilian renewable‑energy projects.

6. Practical Tips for Companies preparing for the Deal

Conduct a rules‑of‑origin audit

Verify that at least 35 % of component value originates within the bloc to qualify for duty‑free status.
Update supply‑chain mapping
Integrate satellite‑based monitoring tools (e.g., Global Forest watch) to comply with the deforestation safeguard.
Register on the EU‑Mercosur compliance portal
Access templates for environmental reporting and tariff classification.
Engage local trade experts
Hire Mercosur‑based customs brokers to navigate varying national procedures (especially in Paraguay, Uruguay and Bolivia).

7. Real‑World example: French Dairy Cooperative

Background: The cooperative “Lait Nouvel‑Rêve” exports cheese to Brazil under a provisional tariff‑free quota.
Action taken: Adopted a low‑carbon milk production protocol, documenting GHG emissions via the EU’s Carbon Border adjustment Mechanism (CBAM).
Outcome: Secured a 10 % price premium in Brazilian retail channels and mitigated French parliamentary criticism.

Case study documented in French Ministry of Agriculture annual report (2025).

8. Timeline Leading to the Signing

date	Milestone
7 Oct 2025	European Council adopts political agreement
12 Nov 2025	european parliament Committee on International Trade votes in favor
28 Nov 2025	French Senate submits amendment demanding stricter environmental clauses
5 Dec 2025	EU Commission adds “green safeguard” to the final text
22 Dec 2025	Paraguay finalizes customs‑IT integration
15 Feb 2026	Formal signing in asunción, Paraguay (heads of state ceremony)
1 Mar 2026	Provisional application begins for industrial goods
1 Jan 2027	Full tariff liberalization for agricultural products (subject to safeguard review)

9. Frequently Asked Questions (FAQ)

Q1: Will the EU‑Mercosur deal affect the EU carbon border tax?

A: Yes. Imported goods benefiting from tariff reductions must still comply with the EU Carbon Border Adjustment Mechanism (CBAM). The agreement includes a provision for mutual recognition of CBAM certificates issued by Mercosur countries that meet EU standards.

Q2: How will the deforestation safeguard be enforced?

A: The european Commission will use satellite imagery verified by the Global Forest Watch platform. If deforestation exceeds the 0.5 % threshold, the Commission can trigger a temporary suspension of tariff reductions for the offending product category.

Q3: Are there any exceptions for sensitive sectors?

A: The agreement maintains “safeguard periods” for poultry, eggs and certain dairy products, allowing the EU to re‑impose duties for up to 12 months if market disruption occurs.

10. Resources for Further Reading

European Commission – Trade Policy: https://trade.ec.europa.eu/mercosur
EU‑Mercosur “Single window” portal: https://singlewindow.eu‑mercosur.org
Global Forest Watch – Deforestation Tracker: https://globalforestwatch.org
OECD Trade forecasts 2025‑2027: https://www.oecd.org/trade/forecast2025

EU Gives Green Light to Mercosur Trade Deal as France Leads Opposition, Signing Set for Paraguay