The long-awaited trade deal between the South American bloc Mercosur and the European Union took provisional effect on Friday, creating a trans-Atlantic market estimated at $22 trillion with 720 million potential consumers. Some nations expect to boost their exports by more than 10% by 2038 once fully implemented.
Deal Signed Amid Controversy
The agreement was signed on January 17 at a meeting of the South American group. European Commission President Ursula von der Leyen's decision to provisionally enact the deal, effectively bypassing the European Parliament, is being challenged by EU lawmakers at the bloc's judiciary. The agreement will be halted if the European body rules against it.
“This is good news for EU businesses of all sizes, good news for our consumers and good news for our farmers, who will gain valuable new export opportunities, with full protection for sensitive sectors,” von der Leyen said on Thursday. She is expected to hold a videoconference on Friday with leaders of Mercosur nations—Brazil, Argentina, Uruguay, and Paraguay—to celebrate the agreement.
Brazil's Role and Support
Earlier this week, Brazil’s President Luiz Inácio Lula da Silva, a key supporter of the agreement, signed a decree validating the deal in his country. He described it as a response to unilateral tariffs imposed last year by U.S. President Donald Trump and a reaffirmation of multilateralism.
“Nothing better than believing in the exercise of democracy, in multilateralism, and in cordial relations between nations,” Lula said at a ceremony in Brasilia celebrating the milestone after more than 25 years of negotiations. Last week, Brazil's Vice President Geraldo Alckmin, one of the negotiators, told the Associated Press that not striking the deal with the EU would have meant falling behind while competitor nations made other agreements.
Brazil is by far Mercosur’s largest economy, with a gross domestic product estimated at over $2.3 trillion in 2025. Lia Valls, an associate researcher at the think-tank Fundacao Getulio Vargas in Rio de Janeiro, agrees that the deal offers better prospects against unilateralism worldwide.
“The EU and Mercosur are showing that it is possible for big blocs to reach a deal in this world where that multilateral system is being very weakened and where the U.S. clearly operates to do that,” Valls told the AP. “It is a very positive sign.”
Opposition and Safeguards
The agreement faced opposition from European farmers and environmental groups and was delayed in December before being referred to the EU’s top court. South American agribusiness industries—chiefly beef, fruit, and minerals—expect a boost in exports to Europe. European automakers, pharmaceutical companies, and technology firms also look forward to new inroads in Mercosur markets.
However, companies in Mercosur countries fear tough competition from European peers in hi-tech industries, while European farmers have concerns about price pressures and imports that do not follow similar environmental standards. French President Emmanuel Macron, a critic of the deal, has long demanded safeguards to monitor and prevent large economic disruption in the EU, increased regulations in Mercosur nations such as pesticide restrictions, and more inspections of imports at EU ports.
The agreement gradually removes trade barriers and tariffs between the two blocs but also retains economic safeguard clauses for European countries to protect sensitive sectors such as poultry, beef, sugar, and fruit from excessive competition.
