EU agreement after more than 25 years: the way is clear for Mercosur

According to the EU Commission, the new free trade zone with more than 700 million inhabitants will be the largest of its kind in the world. The agreement on the controversial agreement was made possible by further concessions to the agricultural lobby, which ultimately led Italy, which had recently been critical, to give in.

Farmer representatives see competition from the Mercosur countries as a threat to the existence of European agriculture. In South America, agricultural products such as beef can be produced more cheaply than in Europe. Protests against the Mercosur agreement were also planned in Austria on Saturday morning. Farmers wanted to express their dissatisfaction with the current agreement with around 50 tractors at the shopping centers in Parndorf.

Farmers’ Association remains no

“With the Mercosur agreement, the EU Commission is putting the existence of our farmers at risk,” warned Freedom Party MEP Roman Haider. ÖVP-EU delegation leader Reinhold Lopatka reacted more positively, although the People’s Party and especially its farmers’ association remained in favor of the agreement due to a negative parliamentary decision in Vienna in 2019. The economic upswing and, among other things, the development of additional sales markets are crucial. “The trade agreement with the Mercosur countries is an important step in this regard.” There is a “security package on an unprecedented scale” for agriculture.

The ÖVP Farmers’ Association, on the other hand, said they had prevailed because Austria stuck to its no vote. “The fact that it (EU-Mercosur agreement, note) is likely to happen anyway is the result of European majority conditions – ultimately Italy was the tip of the scales,” said Farmers’ Association President and parliamentarian Georg Strasser.

The agreement was actually supposed to have been signed in Brazil shortly before Christmas. However, the necessary majority in the Council of EU Member States was not yet achieved at that time because Italy tied its approval to further promises of support to European farmers. Italy’s yes was necessary because France and Poland, two other large EU states, reject the agreement in its current form.

Sign to Donald Trump

The new free trade zone is also intended to be a signal against the protectionist customs policy of US President Donald Trump set. The plan is to largely reduce tariffs and trade barriers between the EU and the Mercosur states. The EU Commission estimates that the agreement can increase annual EU exports to South America by up to 39 percent (49 billion euros) – supporting more than 440,000 jobs across Europe. Particularly great opportunities are seen for the automotive industry, mechanical engineering and the pharmaceutical industry. For example, a tariff of 35 percent is currently due on car imports into the Mercosur countries.

Negotiations on the Mercosur agreement had already started in 1999. The EU Commission then concluded it in December 2024 despite ongoing criticism from countries such as France. Most recently, the EU’s customs dispute with the USA brought new dynamics to the process. Many countries now want to show that the days of fair trade are not over – Germany in particular is one of them.

Extensive safety net for farmers

In order to take the wind out of the sails of the ongoing protests by farmers against the planned free trade zone, the European Commission recently developed additional economic security clauses. In the event of a harmful increase in imports from the Mercosur countries or an excessive fall in prices for EU producers, countermeasures should be able to be taken quickly. These would lead to tariff advantages being temporarily suspended again. Particularly intensive monitoring is planned for imports of products such as beef, poultry, rice, honey, eggs, garlic, ethanol, citrus fruits and sugar.

There should also be a report on the effects of imports from the Mercosur countries Brazil, Argentina, Uruguay and Paraguay at least every six months. Bolivia now also belongs to the Mercosur alliance. However, the country still has to adapt rules before it can benefit from the free trade agreement. Signing is planned in Paraguay The agreement is now to be signed in Paraguay, which currently holds the rotating presidency of the Mercosur confederation. From the EU, EU Commission President Ursula von der Leyen and Council President António Costa want to travel to the South American country. After the agreement this Friday, a written decision is still needed to sign and conclude the agreement. However, this is considered a formality.