EU–Mercosur Free Trade Deal Explained: Why a 25-Year Negotiation Is Finally Being Sealed — and Why It’s Still Contested

After nearly a quarter-century of negotiations, the European Union and Mercosur, South America’s largest trade bloc, are set to sign a landmark free trade agreement (FTA) in Paraguay next week. The deal, formally concluded in December 2024, marks the EU’s largest trade agreement in terms of tariff reductions. Yet, even as EU ambassadors voted 21–5 to back it, strong resistance from key member states — notably France — underscores how politically sensitive the agreement remains.

What is Mercosur and who are its members?

Mercosur (short for “Mercado Común del Sur” or Southern Common Market) is a regional trade bloc comprising “Brazil”, “Argentina”, “Paraguay”, “Uruguay”, and “Bolivia”, its newest member. Brazil dominates the bloc by population, economic size and territory. Venezuela, once a member, has been suspended indefinitely over democratic backsliding.

Formed in 1991, Mercosur has often struggled with internal divisions, protectionism and uneven integration — factors that partly explain why negotiations with the EU, launched in 1999, dragged on for so long.

What does the EU–Mercosur deal actually include?

According to the “European Commission”, the agreement will remove over €4 billion worth of duties on EU exports, making it the bloc’s biggest-ever tariff-cutting exercise.

Key provisions include:

• Mercosur removing duties on 91% of EU exports over 15 years (up from 35% now)
• The EU removing duties on 92% of Mercosur exports within 10 years
• Current goods trade between the two blocs stands at €111 billion annually

Mercosur currently imposes steep tariffs — up to 35% on car parts, 28% on dairy products and 27% on wines. In return, the EU will open its market further to South American agricultural exports, though with quotas on sensitive items.

Agriculture, quotas and safeguards at the heart of the bargain

Agriculture lies at the core of both the deal’s economic promise and its political controversy.

The EU has agreed to:

• Increase its beef import quota by 99,000 tonnes
• Allow limited additional imports of poultry, sugar, ethanol and rice

These extra imports amount to just 1.6% of EU beef consumption and 1.4% of poultry — figures Brussels cites to argue that the impact will be manageable.

Mercosur, in turn, will grant the EU duty-free quotas such as 30,000 tonnes of cheese, while maintaining limits on products like milk powder and infant formula. Around 350 EU food and drink products will also receive geographic indication (GI) protection.

To address farmer concerns, the EU has built in safeguard clauses allowing imports to be suspended if market disruption occurs, created a crisis fund, reduced fertiliser duties, and accelerated €45 billion in support for farmers.

Why France and others are opposing the agreement

Despite these protections, France, Poland, Austria, Hungary and Ireland voted against the deal, with Belgium abstaining. Italy, which had earlier opposed it, lifted its veto at the last moment.

The opposition rests on two main pillars:

• Agricultural competition: Farmers fear cheaper South American beef, poultry and sugar will undercut domestic producers. Irish farmers, in particular, have protested against the additional beef quota.
• Environmental standards: Critics argue the deal lacks enforceable safeguards against deforestation and biodiversity loss, especially in the Amazon. They say Mercosur producers may not meet the EU’s environmental and pesticide standards.

Protests by farmers in Paris and demonstrations in Poland reflect the domestic political pressure facing several European governments.

Why the deal matters geopolitically — and why now

Beyond trade flows, the agreement carries strategic weight. Proponents argue it helps the EU diversify away from over-reliance on traditional partners and deepen engagement with the Global South at a time of growing Chinese influence in Latin America.

The timing is also shaped by global trade uncertainty following “Donald Trump”’s return to the White House and the re-imposition of sweeping US tariffs. EU officials see the Mercosur deal as a way to offset potential export losses and reinforce rules-based trade.

Critical minerals and the China question

A less discussed but crucial dimension of the deal is access to critical minerals. Brazil holds around 20% of global reserves of graphite, nickel, manganese and rare earths, and 94% of the world’s niobium — vital for aerospace manufacturing. Argentina is the world’s third-largest producer of lithium, a key input for electric vehicle batteries.

Reducing dependence on China for these materials has become a strategic priority for the EU, and closer economic ties with Mercosur could support that goal.

What the agreement signals for both blocs

For Mercosur, the deal helps legitimise the 35-year-old bloc as a serious global trading partner despite its internal frictions. For the EU, it signals a willingness to accept political costs at home to secure long-term strategic and economic gains abroad.

An analysis by Bloomberg Economics estimates the agreement could boost Mercosur’s economy by 0.7% and Europe’s by 0.1%. Whether those gains outweigh the domestic backlash — especially from farmers — will shape how smoothly the deal is ratified and implemented in the months ahead.