On December 6, 2024, the European Union and four Mercosur member countries (Argentina, Brazil, Paraguay, and Uruguay) reached a political agreement on trade after years of negotiations. This agreement laid the foundation for the legislative proposal presented on September 3 by the European Commission regarding new trade agreements with the above-mentioned countries and Mexico.
The press release emphasizes the importance of these agreements in diversifying the Union’s trade relations and creating new economic development opportunities for EU countries, thanks to increased exports to countries with which, until now, no preferential trade agreement existed.

The agreement’s numbers

In terms of numbers, Mercosur represents a market of 700 million consumers.

The agreement is estimated to increase annual EU exports to Mercosur by up to 39% (€49 billion) by reducing and, in some cases, eliminating tariffs on numerous types of goods, including machinery, pharmaceuticals, steel, metal, plastics, and clothing.

Regarding agri-food products, for which EU products currently face tariffs ranging from 27% to 55%, the goal is a substantial reduction in tariffs to expand the market and simplify trade. Agri-food exports are estimated to increase by 50%.

Agriculture

To protect European farmers and food producers, the text includes a series of measures, including:

  • limiting preferential agri-food imports from Mercosur to a fraction of EU production (for example, 1.5% for beef and 1.3% for poultry);
  • Bilateral safeguards: The Commission proposes to further strengthen safeguards protecting sensitive European products from any harmful increase in imports from Mercosur;
  • Sanitary and Phytosanitary (SPS) standards: The Commission and Brazil have committed to establishing a high-level dialogue on sanitary and phytosanitary issues, along with an EU-Mercosur SPS Committee, to ensure compliance and also to facilitate the rapid resolution of any issues that may arise;
  • Alignment of production standards: Among other initiatives, the Commission has established the principle that the most hazardous pesticides banned in the EU for health or environmental reasons are not allowed to re-enter the EU through imported products, based on an impact assessment proposed by the Commission;
  • Protection of Protected Geographical Indication products: These are the 344 European PGIs that are protected from imitation or fraud, 57 of which are Italian;
  • Financial support: The Commission has established a strong financial safety net (€6.3 billion foreseen as a safety net in the next EU budget 2028-2032) to support farmers in the unlikely event that the agreement has a detrimental impact on EU agricultural markets.

Updated agreement with Mexico

Mexico is one of the EU’s longest-standing trading partners and Latin America’s second-largest trading partner, with the original agreement dating back to 2000. The EU exports goods and services to Mexico annually worth over €70 billion.

The updated EU-Mexico agreement will eliminate the remaining prohibitive tariffs on EU agri-food exports to Mexico, such as cheese, poultry, pork, pasta, apples, jams, chocolate, and wine.

The new agreement will provide crucial access to critical raw materials, benefiting strategic industries in Europe, as Mexico is a major supplier of fluorspar (used in a wide variety of chemical, steel, and ceramic processes), bismuth (used in pharmaceuticals and cosmetics), and antimony (used, for example, as a flame retardant, lead-acid batteries, glass, and ceramics).

Next steps

The EMPA and the MGA require separate approval by the European Parliament and Member States before they each can enter into force. The Commission proposals for conclusion and signature include two parallel legal instruments for each agreement:

  • the EU-Mercosur Partnership Agreement (EMPA) and the the EU-Mexico Modernised Global Agreement (MGA), subject to separate ratification by all Member States; and
  • two Interim Trade Agreements (iTA), one for Mercosur and one for Mexico, covering only those parts of the EMPA and MGA that are of exclusive EU competence, to be adopted through the EU-only ratification process – that is, involving the European Parliament and the Council of the EU. The iTAs will expire when the EMPA and the MGA enter into force.

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