On January 17, 2026, Ursula von der Leyen, the President of the European Commission, and her Mercosur counterparts converged on Asunción, Paraguay to sign an agreement over 30 years in the making. In this global insight, we unpack this historic agreement between the European Union (EU) and the Southern Common Market (Mercosur; incl. Argentina, Brazil, Paraguay, & Uruguay).
History
In 1995, the EU, then the European Community (EC), and Mercosur first formalized relations with the signing of the EC-Mercosur Cooperation Agreement. This framework agreement entered into force in January 1999 and provided for regular communications to discuss further economic and political cooperation. Indeed, in early 2000, the EU and Mercosur looked to deepen this cooperation by opening negotiations on an association agreement.
By 2004, negotiations stalled out over protectionist trade and equity concerns. For over a decade, abortive efforts to revive the negotiations were made, but none succeeded, undone by insufficient political will and enduring disagreements. Rising global trade tensions in 2016, however, revitalized negotiations and in June 2019 the two parties concluded an agreement in principle.
Over the next five years, however, political disagreements on both sides of the Atlantic complicated the agreement's signing. The most vocal opposition emerged from EU farmers, who cited unfair competition and sustainability concerns. Despite these objections, a political agreement was reached in 2024 and, finally, in the shadow of another global trade shakeup, resulted in the January 2026 signing of the EU-Mercosur Partnership Agreement (EMPA) and the associated Interim Trade Agreement (iTA).
What’s Next? The Final Hurtle, Ratification
Signing the agreements is just the beginning. The final hurdle for both the EMPA and the iTA is ratification. Although all parties have signed the agreements, they must still be ratified by the constituent members of each trading bloc before entering into force.
Mercosur’s ratification process allows for piecemeal approval, meaning that the EMPA and iTA may enter into force for individual member states as they complete ratification. The EU, by contrast, faces a more complex ratification pathway. The iTA requires approval by a qualified majority in the Council of the EU and consent of the European Parliament, while the EMPA will require unanimous ratification by all EU member states.
Given the EU's lower ratification threshold, the trade-focused iTA is likely to enter into force in 2026 and will then be replaced by the EMPA. The EMPA, with its wider political scope, faces a longer and more uncertain path, as opposition to the agreement persists within the EU.
Key Provisions: What’s in the Deal?
Spanning over 1,000 pages, the EMPA and iTA cover topics ranging from tariff reduction to climate change. Here are a few of the more notable provisions:
- The gradual elimination of tariffs on over 90% of goods and services between the two trading blocs. Key wins for EU exporters include tariff reductions on manufactured goods and certain foodstuffs/drinks (e.g., chocolate/confectionery, spirits, wines, etc.). Mercosur-based exporter’s notable wins include tariff reductions in various agricultural goods and rare earth minerals.
- In a concession to EU farmers, bilateral safeguards in the form of tariff rate quotas and streamlined violation adjudication were included for ‘sensitive EU commodities’.
- Protection from imitation of 344 EU geographical indications (e.g. Champagne, Irish Whiskey, Feta cheese, etc.) for food products in Mercosur markets.
- Political and economic cooperation on the tenets of the Paris Climate Agreement, deforestation, and labor rights.
Why This Matters for Your Business?
Despite the challenges that remain, the EU-Mercosur deal should be considered a triumph of multilateralism in a time when bilateralism is becoming increasingly common. For exporters, producers, and global supply chain stakeholders, the agreement could open new markets, reduce tariffs, and reshape competitive dynamics across agriculture, manufacturing, and beyond.
If you would like a more detailed breakdown of the EU-Mercosur deal and how it might impact your business, please don’t hesitate to reach out to Bryant Christie Inc.