EU Concludes Mercosur Trade Deal After 25 Years of Negotiations

The European Union has secured provisional approval for a comprehensive trade agreement with the Mercosur bloc, comprising Brazil, Argentina, Uruguay and Paraguay, marking the culmination of negotiations spanning more than two decades. The pact faces considerable internal opposition despite receiving backing from a qualified majority of member state ambassadors.

The agreement establishes a free trade area encompassing approximately 700 million people across both continents. Whilst ambassadors from most member states endorsed the arrangement, the deal remains subject to ratification by European Union ministers and requires subsequent approval from the European Parliament. France, Ireland, Poland, Hungary and Austria registered formal opposition to the agreement, whilst Belgium abstained from voting. Italy, which had previously blocked progress, shifted its position following concessions secured from Brussels.

Agricultural interests have proved the primary source of contention throughout negotiations. European farming constituencies expressed concerns regarding competitive pressures from Latin American agricultural producers, prompting the European Commission to allocate substantial subsidies aimed at protecting continental farmers from perceived unfair competition. These protectionist measures consumed considerable political capital throughout 2025.

From an economic perspective, the deal offers modest tangible benefits to the European economy. Commission estimates project the agreement will contribute a marginal 0.05 per cent increase to bloc-wide growth, with benefits accruing gradually over a 15-year implementation period. This limited economic upside raises questions about the strategic rationale behind the prolonged negotiating effort, particularly given the significant political capital expended.

The geopolitical dimension assumes greater significance than the immediate economic calculus. The agreement arrives amid heightened tensions in transatlantic relations and follows recent assertions of American influence in Latin America, notably regarding Venezuela’s political situation. China has simultaneously expanded its economic footprint across the continent, intensifying competition for regional partnerships. European policymakers view the Mercosur deal as essential for diversifying export markets and reducing dependency on United States trade relationships.

German Chancellor Friedrich Merz characterised the agreement as a milestone in European trade policy, emphasising enhanced strategic sovereignty whilst acknowledging that 25 years represented an excessive negotiating timeline. French President Emmanuel Macron maintained Paris’s opposition, citing risks to European food security. Hungarian Foreign Affairs Minister Peter Szijjarto argued the deal threatened domestic agricultural livelihoods through unlimited South American imports.

Policy analysts suggest failure to conclude the agreement risked pushing Latin American economies closer to Chinese economic alignment. Agathe Demarais of the European Council on Foreign Relations noted the deal signals European commitment to market diversification away from American dependence. The agreement’s strategic value in countering Chinese influence and asserting European relevance in Latin America appears to outweigh its limited near-term economic benefits, reflecting broader shifts in global trade architecture and geopolitical realignment.