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Since December 2025, a wave of agrarian anger has swept across Europe: farmers have blocked the famous Arc de Triomphe in Paris and tractors have descended upon the EU Parliament in Strasbourg, France. The trigger is the EU-Mercosur trade agreement signed on January 17.
Mercosur or the Southern Common Market is a regional South American trade bloc established in 1991, comprising Argentina, Brazil, Bolivia, Paraguay and Uruguay. The deal between the two blocs creates one of the biggest free trade zones in the world, covering a market of 700 million consumers, as data by the European Commission shows. However, European farmers fear unfair competition and say the deal will undercut European agriculture by allowing cheaper foreign products to replace domestic goods, even as investment by local farmers is restricted.
The EU-Mercosur Partnership Agreement (EMPA) and the EU-Mercosur Interim Trade Agreement (ITA) will have to be ratified by all 27 EU member-states. Enforcement of ITA will also require consent of the European Parliament and adoption of a decision on the conclusion by the Council of the European Union.
However, just one day after the formal signing, the ratification ran into trouble. On January 21, the lawmakers of the 27-member EU voted (334 votes in favor to 324 against) to send the trade deal to European Court of Justice (ECJ) for a judicial review. Media reports say that the deal could be delayed by two years. France, which is Europe’s major agricultural producer, and where much of the protests are centred, wants stronger protections for farmers. France was also one of the five countries which had voted against signing the deal on January 9, along with Ireland, Poland, Hungary and Austria.
What is the big deal?
The deal will remove duties on over 90 per cent of goods exported to EU from the South American countries and vice versa. Tariffs already in place will decline in a planned phase-out period of 10-15 years. By the end of this period, custom duties on a vast majority of products will be reduced to zero. Agricultural products and critical minerals from Mercosur, and cars, chemicals, and pharmaceuticals from Europe, will likely be the main beneficiaries.
The European Commission projects that the agreement will remove more than €4 billion worth of duties on EU exports annually. Current goods trade between the two blocs stands at €111 billion annually. By 2040, the Commission estimates that the agreement will boost EU exports by €49 billion and Mercosur exports by €9 billion. European Commission Presi-dent Ursula von der Leyen has called the deal a win-win partnership, with both regions standing to gain “economically, diplomatically and geopolitically”.
The deal classifies certain products as “sensitive commodities” in the agriculture sector, for which “safeguard” clauses have been included in the deal. These products include beef, poultry meat, milk powder, cheese, rice, maize, sorghum, sugar, honey, ethanol, biodiesel, among others. These clauses limit tariff-free quotas for Mercosur products. For example, for beef, the quota allows in only an additional 1.5 per cent of total EU production, and for poultry, only 1.3 per cent. As per the safeguard measures, if there are sudden, sharp rises in imports, EU can take action to limit them.
The Council of the European Union says that there should be a close monitoring of imports of sensitive products and that nations should inform the Commission of any trends in imports which might call for imposition of safeguard measures and temporary suspension of tariff preferences in case of “serious injury to EU farmers”. Serious injury is defined as a rise in import volume or a decrease in prices by over 8 per cent compared to the three-year average. Further, the Commission should present a monitoring report at least every six months. “These safeguards are internal procedures of the EU and do not belong to the agreement. It is hard to foresee how the Mercosur countries will react to their application,” Andrés Malamud, Senior Research Fellow at the Institute of Social Sciences, University of Lisbon, tells Down To Earth.
Maria C Latorre, professor of applied economics at the Complutense University of Madrid, says the deal’s benefits outweigh the disadvantages and that not all agricultural producers are unhappy. “Oil producers, wine producers, dairy, face huge tariffs right now but they will win with this agreement. So, we have to talk about only some parts,” she said on the France 24 news channel. “I have estimated that after it is fully implemented, which is a lot of years, only around 15 per cent of the trade coming from Mercosur to EU is agriculture. Rest 60 per cent is manufacturing and remaining 25 per cent is services,” she said.
The current world trade order has pushed the EU to diversify partnerships and reduce exposure to geopolitical and economic shocks by securing new markets and allies. Leyen, on the occasion of the signing, said, “Our signal to the rest of the world is clear: the EU and Mercosur are choosing cooperation over competition, and partnership over polarisation.”
Beyond tariffs and market access, the deal has a strategic dimension. Many Mercosur countries sit atop minerals that could be increasingly central to the EU’s industrial and climate ambitions. Brazil accounts for a fifth of global reserves of graphite, nickel, manganese and rare earth elements, and dominates production of niobium, a metal critical for high-performance alloys used in aviation and defence. Argentina has emerged as a key player in the global lithium supply chain, a key component in electric vehicle batteries. As concerns grow over supply-chain concentration and strategic dependence, particularly on China, through this deal, the EU seeks to secure alternative sources of critical raw materials.
This article was originally published in the the February 1-15, 2026 print edition of Down To Earth