European Union-Mercosur Agreement: Assessing Strategic Implications for Europe
Jesús Arturo Córdoba[1], OBELA[2]
After more than 30 years of negotiations, the EU-Mercosur Free Trade Agreement was initially signed on 17 January 2026 (ratification). Almost 800 million people and more than 30 nations are involved in what will be one of the most important free trade agreements globally. However, the treaty is the subject of considerable controversy, with questions about whether the free trade agreement benefits all these people and whether they participate equally in it. Faced with a United States that uses tariffs as an aggressive trade policy, several countries are changing the direction of their trade, such as Mercosur, which has agreed to a free trade agreement with the European Free Trade Association. This bloc seeks to move even closer to Europe, now with the treaty that gives rise to this text. This article will review the implications in the international context and their possible consequences.
In the mid-1990s, the first round of negotiations between the blocs took place, but it came to nothing, and the Interregional Cooperation Framework Agreement was signed instead. Subsequently, a second round of negotiations in the 2010s also failed to produce an agreement due to concerns from environmental activists and European farmers. It was terminated because Argentina, taking protectionist measures, did not want to integrate with a Europe weakened by the subprime crisis. It was not until 2019 that the negotiations ended, and the treaty was announced in December 2024 for signing in January 2026.
On 9 January 2026, the Council of the European Union voted to sign the treaty. Belgium abstained, while France, Austria, Hungary, Ireland, and Poland voted against. However, 21 countries voted in favour. This provided a qualified majority (55% of countries, 65% of the population) in the European Union.
Opposition to the treaty, led by France, seeks to defend the European agricultural sector and send a message about its food sovereignty. Countries such as Poland, Ireland, and Hungary also rejected the treaty, as it threatens their agricultural markets and livestock industries. In Austria, the parliament did not approve the trade agreement in 2019, and this decision cannot be changed, as it would be unconstitutional. Belgium was the only country to abstain, due to a lack of internal consensus; the region of Flanders is in favour, while the region of Wallonia is against it.
Without Italy, the agreement would not have been possible, as Italy opposed the deal due to concerns about its agricultural sector. However, the European Commission established safeguards for these sectors, and the market opportunity for high-end textile and car brands mitigated the risk posed by the opening up of agriculture. It was the safeguards that prompted the change of vote by the President of the Italian Council of Ministers, Giorgia Meloni, on the premise that a positive vote is conditional on the guarantees of the safeguards.
The rest of the EU supports the agreement. Germany and Spain defend it as a gateway to the Mercosur automotive market. Volkswagen and BMW could recover market losses in Asia. Spain aims to join Mercosur more strongly, since its vehicles cannot compete in the US market.
Unlike Europe, Mercosur countries present a unified stance on the agreement, reflecting consensus among leaders with diverse political perspectives. Both the Argentine neoliberal and the Brazilian leftist emphasise the commercial relevance of the agreement at this time. Thus, ratification now depends on the EU.
Safeguards are a trade mechanism within the agreement that aims to protect local producers by stabilising the prices of sensitive products covered by the treaty. The safeguards stipulate that if the average price of sensitive products falls by 10%, these products will not enter the common market, thereby maintaining the treaty's preferential tariffs. Despite Mercosur's opposition, these measures will be part of the treaty.
The European Commission declared a basket of 23 sensitive items—mainly agricultural products, animal products, biodiesel, ethanol, alcoholic beverages such as rum (which Mercosur exports in large quantities), and wine. European farmers are concerned that imported products are cheaper because environmental regulations abroad are less strict. In contrast, stricter EU regulations and high agricultural subsidies lead to higher prices, prompting farmer opposition.
The EU is expanding its markets in response to US uncertainty. This underscores the need to avoid dependence on a single trading partner and to diversify. Meanwhile, the suspension of the EU-US agreement could mark the beginning of a decline in transatlantic trade. The EU already has several trade agreements in place and under negotiation, such as the recent one with India. The United States has been its main non-EU trading partner since the 1950s. The breakdown of agreements with the US in the last year has led the EU in this direction.
