In December 2024, the European Union and four Mercosur nations — Argentina, Brazil, Paraguay, and Uruguay — reached a political agreement on a landmark trade and partnership deal. Since then, negotiations and political developments accelerated, culminating in the formal signing of the agreement on 17 January 2026 in Asunción, Paraguay, after more than 25 years of negotiations.
This historic step still does not mean the deal is already in force; it now progresses through ratification processes in the European Parliament and the national legislatures of Mercosur members.
About Mercosur
The Mercosur trade bloc — Argentina, Brazil, Paraguay, and Uruguay — is one of the world’s largest regional trading partnerships. Established in 1991 to eliminate internal trade barriers and coordinate external trade policy, Mercosur accounts for a population of hundreds of millions and significant global agricultural exports.
European exporters and importers have longstanding commercial ties with Mercosur countries, with the EU being a major destination for manufactured goods and Mercosur supplying agricultural and raw materials.
The EU-Mercosur Trade Agreement: What’s New
Signature of the Agreement – On 17 January 2026, officials from the EU and the Mercosur countries signed the EU–Mercosur Association Agreement along with an Interim Trade Agreement (iTA). This event marked a major milestone in diplomatic and trade relations and lays the groundwork for one of the world’s largest free trade areas, spanning an economic space with more than 700 million people.
The interim agreement framework allows trade provisions to begin earlier, before the full partnership agreement enters into force, but it still requires approval — primarily from the European Parliament.
Trade Liberalization and Tariffs
Under the signed deal:
The EU will eliminate tariffs on a large share of imports from Mercosur — roughly 92% of the tariff lines in value terms (about US$61 billion) — opening EU markets significantly.
Mercosur countries will gain preferential access to EU markets for agricultural exports like beef, sugar, soy, rice, and ethanol.
The transitional timetable differs: EU liberalization tends to be faster, while Mercosur countries, like Brazil, secure longer phase-in periods (10–15 years) for reducing certain tariffs.
Safeguards and Sensitive Goods
To address concerns especially from European farmers, the EU’s version of the agreement includes safeguard mechanisms for sensitive agricultural products. These mechanisms could allow temporary re-imposition of tariffs or additional checks if import surges disrupt local markets.
Impact on European Food Imports and Food Production
Increased Availability of Affordable Products
Mercosur countries are some of the world’s largest agricultural exporters. For example, Brazil is a leading producer of beef, poultry, and soybeans while Argentina is renowned for high-quality beef and wine.
As tariffs decrease, European food importers will gain access to a wider range of low-cost, high-volume products, which could result in lower prices for consumers. The agreement provides an opportunity to diversify sources of imported food. This is particularly important given global disruptions in food supply chains caused by events like the COVID-19 pandemic and the war in Ukraine.
Pressure on European Farmers
The influx of cheaper agricultural products from Mercosur could challenge European farmers. This has sparked concerns among farming unions and policymakers about the impact on local agriculture.
Mercosur countries like Brazil and Argentina are major agricultural exporters with lower production costs compared to the EU countries. The reduction of tariffs under the deal could result in an influx of cheaper agricultural products, such as beef, poultry, and sugar, which may negatively impact European farmers’ prices and profits.
Small-scale farmers in Europe, who already face tight profit margins, could struggle to compete with these lower-cost imports because Mercosur products are often produced under less stringent regulations, which creates a perceived “unfair playing field.” This could put pressure on EU farmers to lower their costs or risk losing market share. The most affected sectors would be: meat – beef, poultry, pork, sugar, and dairy.
Quality and Standards
European consumers are highly conscious of food quality and sustainability. Mercosur’s relaxed environmental and labor standards have raised concerns about products such as Brazilian beef, which has been linked to deforestation in the Amazon. European food importers will need to address these issues by carefully selecting suppliers and ensuring adherence to EU standards.
Specialized Imports
Beyond bulk commodities, Mercosur countries offer specialty and niche products, such as Argentine wines, Paraguayan yerba mate, and Brazilian tropical fruits. These items can help importers diversify their offerings and tap into growing consumer interest in exotic and international foods.
While the Mercosur-EU trade deal offers opportunities for increased trade and market access, with the potential to reshape Europe’s food supply chain, fostering greater integration and collaboration between these two regions, it also poses significant risks to European farmers in several key sectors. To mitigate these challenges, the EU may need to implement protective measures, such as quotas, subsidies, or stricter sustainability requirements for imports.
Political Challenges and Next Steps
Despite the signing, significant hurdles remain:
The agreement must be approved by the European Parliament and ratified by Mercosur member legislatures before it can enter into force, potentially in 2026 or later.
The political debates in Europe are expected to be intense, with environmental, agricultural, and consumer groups lobbying for conditions and safeguards.
Implementation Timeline
Interim trade mechanisms may allow some tariff reductions and trade liberalization to begin before full ratification, but the full suite of trade and political cooperation provisions will phase in over subsequent years.
Regional Political Dynamics
Recent developments also show shifts in political posture. Some leaders, including Argentine President Javier Milei, have publicly supported reorienting trade policy if better bilateral deals with other partners (like the U.S.) emerge. Mercosur members and the EU leadership have emphasized sustainability and shared prosperity, a narrative likely to shape parliamentary debates.
Conclusion
The EU-Mercosur trade agreement has transitioned from a long-negotiated political pact to a signed international treaty. This marks a crucial turning point for European food importers and the wider food sector — signaling deeper market integration, tariff liberalization, and expanded supply chains, but also heightened competition and political scrutiny, especially regarding agricultural and environmental standards.
The next phase will determine how rapidly and broadly these impacts materialize, as the ratification process progresses and EU food importers adjust their strategies in response to competitive pressures and new commercial opportunities.
