“After 25 years of negotiations, EU member states have approved a trade agreement with the South American Mercosur bloc (Argentina, Brazil, Paraguay, and Uruguay) that will lower tariffs on over 90 percent of goods traded between the two markets,” notes The Doomslayer.
It will result in freer trade between the two trading blocs, but not totally free trade.
Politico reports:
A qualified majority of EU member countries on Friday approved the bloc’s long-awaited trade deal with the South American Mercosur bloc.
France, Poland, Austria, Ireland and Hungary expressed their opposition while Belgium abstained. Italy voted in favor, after forcing a delay last month….
“Our message to the world is this: Partnership creates prosperity and openness drives progress,” European Commission President Ursula von der Leyen said. She hinted at signing the treaty in Paraguay “soon” but did not reveal whether that would be as early as Monday….
Additional farm market safeguards that would kick in if there is a surge in imports from Brazil, Argentina, Paraguay and Uruguay also won the approval of EU countries. “We have heard the concerns of our farmers and our agricultural sector and we have acted on them. This agreement contains robust safeguards to protect their livelihoods,” von der Leyen said….
The EU-Mercosur deal is set to create the world’s largest free trade area, covering some 700 million people. From Brussels’ perspective, the agreement is a major geopolitical win in light of China’s rising share in trade and influence in Latin America.
Reuters adds:
Mercosur will remove duties on 91% of EU exports, including for cars from a current 35% over a period of 15 years. The EU will progressively remove duties on 92% of Mercosur exports over a period of up to 10 years.
Mercosur will also remove duties on EU agriculture-based products, such as the 17% on wines and 20-35% on spirits.
For more sensitive farm products, the EU will offer increased quotas, including 99,000 metric tons more beef, while Mercosur will give the EU a duty-free 30,000-ton quota for cheeses.
There are also EU quotas for poultry, pork, sugar, ethanol, rice, honey, maize and sweet corn and for Mercosur on milk powders and infant formula.
Further, the deal recognizes 350 geographic indications to prevent imitation of certain traditional EU foodstuffs such as Parmigiano Reggiano cheese.
Countries like Germany and Spain argue that the deal provides a route away from dependence on China, especially on critical minerals. They also say it helps blunt the economic impact of tariffs imposed by the Trump administration.
This agreement is the largest reduction in tariffs charged on products from the European Union, eliminating about $5 billion per year in duties charged on European Union exports.
“The EU says that given Mercosur’s modest collection of trade agreements, the EU would have an early-mover advantage and notes that EU companies will be able to bid for public contracts in Mercosur on the same terms as local suppliers – something Mercosur has not previously offered in trade agreements.”
The EU views Mercosur as less likely to use control over critical minerals as a weapon than China, which currently processes most of the critical mineral needed for batteries — lithium. The agreement forbids export taxes on most such minerals.
Some left-wing environmental groups oppose the freer-trade deal. Friends of the Earth denounced it as “climate-wrecking.” Friends of the Earth fears the trade deal will lead to increased deforestation as South American nations sell more farm produce and raw materials, sometimes from the Amazon, the world’s largest tropical rainforest.
“Deforestation in the Amazon is slowing down. Around 5,800 square kilometers of the forest were cleared this year, down from 6,500 in 2024 and over 20,000 in 1988,” reported The Doomslayer.
This is happening even as the South American economy is much bigger than it was in 1988. Brazil and Peru had shrinking economies in 1988. In 2025, their economies grew.
