European Union approves trade agreement with Mercosur

On Friday (9), European Union countries approved in Brussels the free trade agreement with Mercosur, the largest of its kind in the world, which will bring together an estimated market of 722 million consumers. Despite opposition led by France, representatives of the member states gave the green light for European Commission President Ursula von der Leyen to sign the treaty next week in Paraguay.

First, however, the votes must be confirmed by the governments of the 27 countries in the bloc, which should occur in the coming hours. The formality did not prevent the German government from expressing its opinion, stating that the treaty "is an important signal at the present time."

Import tariffs on 91% of goods traded between the two blocs will be eliminated. According to European estimates, exports to Mercosur could increase by up to 39% and secure 440,000 jobs on the continent.

The agreement, which began to be negotiated in 1999 but remained shelved for long periods, gained traction at the end of 2024, with special efforts by the Luiz Inácio Lula da Silva administration and European countries with export agendas, such as Germany and Spain.

In recent months, the treaty has gained geopolitical weight in light of Donald Trump's tariffs and his renewed offensive against multilateralism. The approval comes days after the US intervention in Venezuela and repeated threats to Greenland, an autonomous territory that is part of the Kingdom of Denmark and, therefore, the EU.

While European ambassadors gave their approval to the pact in Brussels, French farmers repeated their invasion of Paris with tractors, exacerbating the political crisis faced by Prime Minister Sébastien Lecornu. Opposition parties plan to use the approval of the treaty, which is almost a dirty word in France, to bring down the government and increase pressure on Emmanuel Macron.

The day before, the French president reiterated France's opposition to the agreement, which had been successful in December when he garnered support from Italy.

This time, Italian negotiators secured a series of concessions from the European Commission in exchange for approving the agreement: among the main ones, the advance of €45 billion in subsidies for the sector and the relaxation of the newly created carbon tax on imported fertilizers.

Without Italy, France, despite having the support of Poland, Hungary, Ireland, and Austria, failed to achieve a blocking minority in the EU Council, characterized by at least four countries, but also by a country representing 35% of the bloc's population.

France must now try to undermine the agreement in the European Parliament, which, according to estimates, needs to ratify the final version of the document by April. A group of MEPs is also trying to refer the treaty to the EU Court of Justice for review, which would delay the process by years.

The issue is one of the few that mobilizes the extremes of the political spectrum in Europe. In addition to the far right's electoral inclination toward European ruralists, left-wing politicians oppose the agreement on social and environmental grounds. According to the Green Party, the agreement "will deepen economic asymmetries, locking Mercosur countries into a development path based on agri-food and mineral exports and hindering economic diversification."

There is great concern about the Amazon, which has gained momentum in recent weeks with the decision by major traders to abandon the Soy Moratorium, following pressure from CADE and the government of Mato Grosso.

In 2024, the volume of transactions between the two blocs reached €111 billion. EU exports are dominated by machinery, chemicals, and transportation equipment, while Mercosur exports focus on agricultural products, minerals, pulp, and paper.

‍

Source: Folha de São Paulo

News written by José Henrique Mariante

Image: Freepik

‍