by Ilinca Anghelescu, Global Director Marketing Communications
On December 6, 2024, the European Union (EU) and the Mercosur bloc—comprising Argentina, Brazil, Paraguay, and Uruguay—finalized a landmark free trade agreement after 25 years of negotiations. This accord aims to create one of the world’s largest free trade zones, impacting over 700 million people and nearly a quarter of global GDP. The agreement plans to eliminate tariffs on more than 90% of goods traded between the two regions, potentially saving EU companies approximately €4 billion annually in export duties.
Despite the anticipated economic benefits, the agreement has encountered significant opposition from European farmers. Agricultural organizations, particularly in France, Spain, and Ireland, express concerns that the influx of South American agricultural products—such as beef, poultry, sugar, and ethanol—could undercut local producers due to lower production costs and differing regulatory standards in Mercosur countries.
French farmers have been particularly vocal, organizing protests and blocking highways to demonstrate their disapproval. They argue that the agreement exposes them to unfair competition, as Mercosur products may not adhere to the stringent environmental and sanitary standards required within the EU. This disparity could lead to market distortions, disadvantaging European farmers who comply with higher regulatory benchmarks.
Environmental concerns also play a role in the opposition. Critics fear that increased agricultural exports from Mercosur countries could accelerate deforestation in regions like the Amazon, undermining global climate commitments. They advocate for the inclusion of enforceable environmental safeguards within the agreement to ensure sustainable trade practices.
The promise of economic growth and strengthened intercontinental ties offered by the EU-Mercosur trade agreement might therefore be short-lived. As it faces substantial resistance from European farmers and environmental groups, the agreement could still face fierce opposition from individual countries (France, Italy, Poland among them). Other European nations, however, see this as a balancing act in the face of Chinese dominance, the Russian situation, and tariffs expected from the incoming US presidency. In any case, despite Ursula von der Leyden’s flight across the Atlantic last Friday, the fate of the agreement on European ground is not yet 100% clear.
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The EU is Mercosur’s most important trade partner. “EU exports to Mercosur were €56 billion in goods in 2023 and €28 billion in services in 2022,” stated the European Commission. It is also the largest foreign investor in Mercosur.
