The European Commission and Mercosur countries announced a trade agreement on Friday, covering a market of 780 million people. European Commission President Ursula von der Leyen, speaking at a summit in Uruguay, hailed the deal as a “truly historic milestone.” She described the agreement as “ambitious and balanced,” calling it both an economic opportunity and a political necessity.
Uruguay’s President Luis Lacalle Pou expressed optimism while acknowledging challenges, stating that prosperity requires effort, not magical solutions. Negotiators from both regions finalized the deal in Montevideo. However, EU member states must approve the agreement before it takes effect.
Opposition and Environmental Standards Shape the Agreement
France has led opposition to the deal, seeking to build a coalition to block it. Poland announced its intent to oppose the agreement, and Italy tied its approval to guarantees for farmers. Ireland, the Netherlands, and Austria have not yet clarified their positions. A European Commission spokesperson emphasized that this political agreement marks only the first stage in a lengthy process requiring approval from all 27 EU member states.
Supporters, including Germany and Spain, argue that the deal will expand markets and maintain EU influence in Latin America amidst China’s growing investments. German Chancellor Olaf Scholz described it as creating “a free market for more than 700 million people,” while Spain’s Prime Minister Pedro Sanchez committed to ensuring its approval.
The European Parliament must also give its consent. The European People’s Party (EPP) praised the agreement as a historic step in strengthening ties between the two regions, emphasizing shared values and ambitions.
To address prior objections, the revised deal includes stricter environmental standards as essential elements. Provisions allow for partial or full suspension if these standards are violated. Binding commitments to halt illegal deforestation in Mercosur countries are also included, addressing a key concern of critics.
The agreement removes tariffs on goods such as wine, cheese, chocolate, automobiles, and clothing. Limited quotas on sensitive products like beef, poultry, and sugar will be phased in over seven years, with safeguards in place for market disruptions. Beef imports, for instance, will be capped at 90,000 tonnes annually, equating to 1.6% of total EU production.
The deal comes at a challenging time for French President Emmanuel Macron, who vocally opposes it. He faces mounting political pressure after the collapse of Prime Minister Michel Barnier’s government, leaving him tasked with forming a new administration.
