The path is clear: After more than 25 years of negotiations, the European Union’s free trade agreement with the South American Mercosur countries is close to completion. On Friday, the EU ambassadors of the 27 member states voted by a majority in favor of the agreement, which is set to create one of the world’s largest free trade zones. German Chancellor Friedrich Merz (CDU) called the deal a “milestone in European trade policy,” while German industry expects “concrete benefits.”
With the Council’s approval, EU Commission President Ursula von der Leyen can sign the treaty as early as Monday in Paraguay. France, Poland, Hungary, Austria, and Ireland voted against the agreement on Friday. Italy, which had requested a postponement of the decision in December, voted in favor and thereby secured the necessary majority.
At its core, the agreement between the EU and the Mercosur countries, Brazil, Argentina, Paraguay, and Uruguay, provides for the elimination of most tariffs. The European Commission expects this to boost EU exports to South America by up to 39 percent. While Europeans would export products such as cars and chemical goods across the Atlantic, Mercosur countries would mainly supply agricultural products and raw materials to Europe.
Chancellor Merz said the agreement was “an important signal of our strategic sovereignty and ability to act.” He added that it was now crucial “to conclude the next free trade agreements swiftly,” urging the Commission to move ahead.
German business associations reacted with relief. The Federation of German Industries (BDI) said the agreement would remove trade barriers and save companies around four billion euros annually in tariffs. Particularly important, it said, was access to critical raw materials such as lithium and copper, for example for electromobility and renewable energy.
With the adoption of the agreement, the EU is demonstrating its ability to act. Mercosur, however, can only be the beginning. The EU must further diversify its strategic partnerships and open up new markets. The German Chamber of Industry and Commerce (DIHK) emphasized that Europe was securing “its place in global trade” through the agreement. Around 12,500 German companies export goods to the Mercosur region, 72 percent of them small and medium-sized enterprises.
Criticism came from environmental groups. Lis Cunha of Greenpeace called the agreement a “catastrophe” for the Amazon rainforest. Sven Hilbig of Bread for the World described it as a “step backward for human rights, climate protection, and the South American economy.” Farmers in several European countries also demonstrated again on Friday against the Mercosur agreement, including in France, Belgium, and Poland. Farmers using tractors blocked highways, among other places in the Belgian-French border region, and announced they would maintain the blockade until Monday.
Despite numerous concessions by the European Commission, many farmers remain highly critical of the agreement. They fear competition from South American products that may not meet European production standards. Against this backdrop, the Commission proposed safeguard measures to prevent, for example, a drop in agricultural prices within the EU. According to diplomatic sources, EU countries approved these protective measures on Friday.
After the EU member states, the European Parliament must also give its consent. Manfred Weber (CSU), chairman of the European People’s Party, called on his fellow lawmakers to send “a clear signal for rules-based global trade.” Mercosur was “an anti-Trump agreement,” he argued, referring to the protectionist trade policy of U.S. President Donald Trump.
The EU is pushing ahead with the expansion of its external trade. This week, Trade Commissioner Maroš Šefčovič hosted Indian Trade Minister Piyush Goyal for talks in Brussels. They aim to bring the free trade agreement between Brussels and New Delhi over the finish line. A joint summit is planned in India on January 27, at which EU Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi could sign the agreement.
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