Mercosur and EU reach historical political agreement

By Estudio Chaloupka

The President of the European Commission, Ursula von der Leyen, and her counterparts from Mercosur countries (Argentinian President Javier Milei, Brazilian President Lula da Silva, Paraguayan President Santiago Peña and Uruguayan President Luis Lacalle Pou) finalised negotiations for a groundbreaking Mercosur-European Unión partnership agreement.

"This is a win-win agreement, which will bring meaningful benefits to consumers and businesses, on both sides. We are focused on fairness and mutual Benefit," stated Von der Leyen once the agreement was announced on December 6, 2024, in Uruguay's capital of Montevideo.

France has been a vocal opponent of the EU-Mercosur trade agreement. The main reason for the opposition is the fear of increased competition from cheaper SouthAmerican agricultural products, particularly beef and poultry, which could harm their domestic agricultural sector.

The proposed EU-Mercosur agreement is composed of a political and cooperation pillar, and a trade pillar. The end of negotiations constitutes the first step in the process towards conclusion of the agreement.

Following final legal scrubbing by both sides, the text will be translated into all official EU languages, and then submitted to the Council and Parliament.

Mercosur is a big market for EU exports and it was until now the only major trading partner in Latin America with which the EU did not have a preferential trade agreement. EU firms exported to the four founding countries of Mercosur €56 billion in goods (in 2023) and €28 billion in services (in 2022).

The goal of the new EU-Mercosur trade deal is to:

-Increase bilateral trade and investment, and lower tariff and non-tariff trade barriers, notably for small and medium sized enterprises
-Create more stable and predictable rules for trade and investment through better and stronger rules, e.g. in the area of intellectual property rights (including geographical indications), food safety standards, competition and good regulatory practices
-Promote joint values such as sustainable development, by strengthening worker’s rights, fight climate change, increase environmental protection, encourage companies to act responsibly, and uphold high food safety standards

How will the agreement help EU food and drink producers market their distinctive regional products (Geographical Indications)?

The EU produces many unique high-quality regional food and drink products like Prosciutto di Parma, Parmigiano Reggiano, Prosecco, and Irish whiskey, protected under a special status called 'Geographical Indications' (GIs). GIs ensure authenticity, enable premium pricing, and prohibit imitation products.

The Mercosur deal will recognize 350 European GIs, banning imitations as well as misleading terms, symbols, flags or images. Only genuine products, such as, for example, Roquefort cheese made in Roquefort, France, will carry the GI name. This protection benefits EU producers, supports exports, and assures Mercosur consumers of product authenticity.