Mercosur-European Union Agreement signed after twenty+ years of negotiations

The Mercosur (Brazil, Argentina, Uruguay, and Paraguay) and European Union (EU) Partnership Agreement, signed on December 6, 2024, represents a milestone in the international relations of both blocs.

After more than 20 years of negotiations, the free trade agreement has finally been signed, with important implications for the entire world economy.

The agreement: details and expectations

The Mercosur-EU agreement provides for a free trade area involving more than 700 million people and is considered a significant victory for global trade.

By eliminating tariffs for a wide range of products, the agreement aims to strengthen trade between the two regions,?promoting not only the expansion of the flow of goods and services but also collaboration in areas such as technology, innovation, and sustainability.

The treaty will allow Mercosur countries’ products to have easier access to EU markets, especially in sectors such as meat, soy, ethanol, and other agro-industrial products.

On the other hand, the EU will also benefit from reducing tariffs on products such as machinery, cars, chemicals, and medicines.

The expected positive impact on the economies of the Mercosur countries is considerable, with the promise of economic growth and the creation of new jobs, as well as opportunities to strengthen production chains and increase exports.

However, the agreement is not without controversy. The opening of markets for agricultural products is viewed with concern by European farmers (especially French), who fear unfair competition from Mercosur products, especially regarding environmental and health standards.

Mercosur countries are under observation because the agreement could jeopardize environmental preservation and conservation and local agricultural policies, especially with regard to the use of pesticides and deforestation.

Diplomatic and political aspects

The agreement is seen as a victory for South American diplomacy, especially after the ups and downs in relations between Mercosur and the EU. The signing of the treaty is seen as proof that, despite political and economic differences over the years, cooperation between the blocs is possible and desirable.

Brazil celebrated the agreement as a victory for the country’s foreign policy and a way to strengthen Mercosur’s position on the world stage. Indeed, the treaty reflects the new orientations of Brazilian foreign policy, which has sought, in recent years, to reverse international isolation and deepen regional and global integration.

It is also an opportunity to demonstrate Brazil’s commitment to sustainability, given that one of Mercosur’s commitments is to ensure that the treaty includes strict environmental conservation clauses, such as combating illegal deforestation and implementing policies to reduce CO2 emissions.

For the EU, the agreement also represents a paradigm shift: for the European Union, Mercosur is now truly an important and strategic emerging market, especially at a time when global trade tensions are rising.

The signing of the treaty is a clear demonstration of the attractive power of the European bloc, which seeks to consolidate its position as a leader in international trade, alongside the USA and China.        

Challenges and opportunities for the future

Despite the signing of the agreement, there are still many challenges to its becoming an effective reality. One of the main obstacles is the implementation of governance mechanisms that ensure that both parties comply with the established clauses.

The next steps include the ratification of the agreement by the parliaments of the member countries, both of the European Union and Mercosur. The process could be long, as some European nations, such as France, have already expressed concern. France has come to the defense of its farmers, who are fearful of competition from Mercosur agribusiness.

Another challenge is related to adapting companies and production sectors to the new parameters of international trade. For many Mercosur countries, the opening of European markets could mean a transformation of production practices, which will have to meet the high standards required by the EU in areas such as sustainability, social responsibility, and labor law.

On the other hand, the agreement offers many opportunities, as it opens new markets and creates favorable conditions for the strengthening of Mercosur economies, especially in the agro-industrial sector. The elimination of customs duties will allow a reduction in export costs, making South American products more competitive in the European market.

In addition, cooperation in sectors such as technological innovation and renewable energy can generate significant mutual benefits, aligning with the energy transition policies in force in Europe and the sustainable development agendas of Mercosur.