13/03/2025

An agreement for the present times

On December 6, 2024, the European Union (EU) and Mercosur announced the conclusion of negotiations between the two blocs. The news was met with enthusiasm and relief by some, while others experienced a sense of déjà vu. The latter recalled June 29, 2019, when the then-leaders of the European Union and the four Mercosur countries reached a trade deal. However, instead of moving forward with its signing and implementation, the process was put on hold for three years before being revived in 2023. Thanks to this new round of dialogue, by December 2024, the parties were able to take their partnership to the next level by establishing new commitments on sustainability. As European Commission President Ursula von der Leyen put it, the agreement “is good for everyone and will bring significant benefits to consumers and businesses on both sides. We seek fairness and mutual benefit.”

Reaching this point required both parties to navigate a long and winding road, overcoming multiple obstacles until the stars and political objectives aligned.

After 25 years of negotiations, this agreement comes at a critical moment for both sides, in a complex geopolitical context marked by rapid change, where reliable partners are increasingly valued. Securing new agreements with trusted allies is essential for the EU’s economic security and resilience, reaffirming its commitment to open markets and trade—part of its very DNA—in a world that is becoming more protectionist and transactional. Moreover, this pact connects two blocs of democratic countries that share fundamental values, such as respect for human rights and the rule of law. In today’s world, strengthening and deepening ties between regions with so much in common is more important than ever.

While the geopolitical dimension is highly relevant, this partnership also presents a major economic opportunity for the EU. It is Mercosur’s first comprehensive trade agreement with global partners, unblocking new opportunities for trade and investment while giving EU businesses a competitive edge in the region.

By creating the world’s largest free trade area, encompassing nearly 800 million consumers, this agreement will support economic growth, enhance competitiveness, and strengthen the resilience of both sides by unlocking new trade and investment opportunities. It will open markets by eliminating often prohibitive tariffs on EU exports to Mercosur, saving EU businesses an estimated €4 billion per year in duties while benefiting key sectors such as automotive and pharmaceuticals, as well as cheese and other dairy products, wines, spirits, chocolate, clothing, and footwear. It is important to note that in order to encourage the modernization of Mercosur’s industries and enhance their competitiveness, tariff reductions and eliminations on the Mercosur side will be implemented gradually, with transition periods of up to 15 years depending on the sector.

The agreement will also ensure trade preferences in strategic net-zero industrial sectors, such as renewable energy technologies and low-carbon fuels—areas where Argentina holds significant potential. By providing legal certainty for investors and facilitating EU investments in local value chains, it will help secure continued access to critical raw materials and key supply chains while reducing strategic dependencies. In doing so, it will complement existing sectoral agreements with Argentina, one of the world's leading mining powers in battery metals and critical raw materials.

The trade agreement is also an asset for European farmers, as it includes balanced commitments to ensure that this partnership does not negatively affect their competitiveness. It will contribute to increasing the EU's agri-food exports while protecting sensitive sectors. The agreement respects EU standards on animal health and food safety—another major concern for the European side. Additionally, the agreement would protect approximately 350 EU geographical indications (GIs) in the Mercosur market, making it the largest EU agreement in terms of GIs, whose selling prices are two to three times higher than regular products.

The agreement represents a significant milestone in the fight against climate change, with firm, specific, and measurable commitments to halt deforestation. Achieving these binding commitments for both sides was a key objective for the EU in this final phase of negotiations, addressing concerns raised by European citizens and their representatives in the European Parliament, particularly regarding the loss of biodiversity in the Amazon.

The agreement raises the level of sustainability commitments between the EU and Mercosur by incorporating the Paris Agreement as a key element of their relationship. It also includes clear and enforceable commitments on sustainable development, including labor rights and the sustainability of forest management and conservation. Additionally, an active role is foreseen for civil society organizations on both sides in evaluating the implementation of the agreement, considering issues related to human rights and the environment.

The political conclusion celebrated on St. Nicholas Day is not the end of the road. On the EU side, the text must undergo a process that includes translation into all official EU languages and will then be presented to the Council and the European Parliament for scrutiny as part of the EU’s ratification procedures. In the meantime, the essential task both inside and outside the EU is to continue providing substantive and objective information about the agreement, including its benefits and its geopolitical and economic significance. The debate and decision must be based on facts, not myths.

Amador Sánchez Rico is the European Union Ambassador to Argentina.