Brussels: After 25 years of negotiations, the European Union and South America’s Mercosur bloc announced a preliminary agreement on a free trade deal on Friday, a milestone that remains fraught with challenges and divisions within Europe.
European Commission President Ursula von der Leyen and Mercosur leaders unveiled the agreement during a press event in Montevideo, emphasizing its significance amidst rising global protectionism.
“This deal is not merely an economic opportunity—it is a political imperative,” von der Leyen stated. “While strong headwinds push toward isolationism and fragmentation, this agreement is our counter to such trends.”
Supporters argue the pact could reduce dependence on trade with China and shield EU nations from potential U.S. tariffs under President-elect Donald Trump. However, significant hurdles remain before the deal can be finalized, including legal formalities, translation, and member-state approvals. France, a staunch critic, has already labeled the pact "unacceptable."
The press event itself reflected the deal’s contentious nature. Only von der Leyen and Uruguayan President Luis Lacalle Pou spoke, with no participation from Brazilian, Argentinian, or Paraguayan presidents. An EU source described the agreement’s passage as a narrow victory, remarking, “It made it through—barely. The real battle lies ahead.”
The agreement incorporates updates since its 2019 draft, including amendments on public procurement, auto trade, and critical mineral exports, as well as a new environmental annex aimed at easing South American concerns over EU protectionism. Brazilian President Luiz Inácio Lula da Silva celebrated the conclusion of negotiations, but Paraguayan President Santiago Peña cautioned that much work remains.
In Europe, however, the deal faces fierce resistance. French Trade Minister Sophie Primas has vowed to block its progression, citing environmental and agricultural concerns. European farmers, supported by groups like Copa-Coge, have expressed outrage, arguing the pact would open markets to South American products that fail to meet EU standards. Protests are planned in Brussels.
Italy and Poland have also signaled opposition, while green organizations such as Friends of the Earth have condemned the agreement as detrimental to climate goals.
Conversely, countries like Germany and Spain champion the deal as essential for diversifying EU trade amidst reduced reliance on Russian markets and growing concerns over China. Spanish Prime Minister Pedro Sanchez affirmed Spain’s commitment to advancing the pact, framing it as mutually beneficial for Europe and Latin America.
The agreement could unlock new markets for European goods such as machinery, vehicles, and luxury food items while securing access to critical minerals like lithium, vital for Europe’s green transition.
For the deal to take effect, approval from 15 of the 27 EU member states representing 65% of the EU population is required, along with a majority vote in the European Parliament.
While South American leaders remain optimistic, opposition within Europe, particularly from France, underscores the formidable obstacles ahead. The trade pact’s future now hinges on whether its proponents can rally sufficient support to overcome entrenched resistance.