EU–Mercosur: Power, Not Prices
- Laura Tatiana Pérez Molina
- Feb 1
- 3 min read
Imagine a trade deal that takes twenty-five years to negotiate, sparks protests across Europe, divides governments, worries environmental groups, and is expected to become one of the most consequential trade agreements of the decade, yet, never designed to deliver immediate economic returns or to transform people’s livelihoods overnight. So why was it signed at all? Because regardless of major implementation challenges, political resistance, and slow effects, the agreement sends a message about how geopolitical dynamics are being reorganised: who supplies whom, who is considered a strategic partner, and which actors share a similar vision of how the international order should function.
From a purely economic perspective, expected returns are not that significant. Most projections estimate long-term GDP increases of around 0.05–0.1% for the EU and between 0.3% and 0.7% for Mercosur by 2040, not impressive numbers. In terms of trade implications for Mercosur, the agreement expands preferential access to the EU consumer market for agricultural commodities, processed foods, and raw materials. The EU commits to eliminating tariffs on roughly 92% of Mercosur exports, including beef, poultry, sugar, ethanol, soy, coffee, and iron ore, albeit with quotas for sensitive products. For european companies, in turn, they gain tariff-free or significantly reduced access to a consumer market of roughly 300 million people, saving millions in duties and boosting exports of cars, machinery, pharmaceuticals, wines, cheeses, and other high-value goods.
Of course every treaty collides with certain sectors of society. In this case, the agricultural sector, in particular, is the strongest opposition. Quotas that allow beef and poultry from Mercosur countries to enter the EU at reduced tariffs have understandably triggered fears of uneven competition and decline in the rural sector, especially among smaller producers. Environmental concerns also further intensify resistance. Critics warn that increased trade in beef and soy could accelerate Amazon deforestation and undermine biodiversity and while the agreement includes commitments in sustainability and references to the Paris Agreement, legal analyses point to regulatory gaps like the use of pesticides, growth hormones, and antibiotics permitted in Mercosur but banned in the EU which deepens public distrust and accusations of weak enforcement.
Challenges are not limited to Europe. For Mercosur, compliance with EU standards imposes adjustment costs, particularly for smaller manufacturers and producers. At the same time, internal fragilities within the bloc complicate implementation. While the agreement strengthens Mercosur’s external position, it also tests its internal cohesion and the capacity to adapt in a regulatory level without deepening domestic inequalities.
Time-wise, the agreement is structured around gradual tariff reductions implemented over many years rather than a sudden shock. This reinforces a central point: the EU–Mercosur deal is not about accelerating growth or economic return, at least initially it is about strategic positioning, a response to a shifting geopolitical environment. Both the EU and Mercosur operate in a global context shaped by high political and trade volatility from the United States, as well as China’s undeniable dominance in resources, logistics, and industrial supply chains. Against this context, the agreement offers the foundations of an alternative institutional architecture: a rules-based partnership, diversified trade routes, and preferential access to critical raw materials.
This idea is particularly evident in supply chains. For the EU, preferential, duty-free access to Mercosur-sourced critical raw materials such as lithium, niobium, tantalum, and graphite addresses one of Europe’s most acute vulnerabilities: dependence on Asian processing hubs and geopolitically exposed routes. At the same time, it establishes tariff schedules, customs facilitation, and clear procedural mechanisms to create enforceable trade corridors. These are operational tools rooted in the belief that cooperation based on rules is still possible and is still the best international order in contrast to what the U.S has recently tried to achieve.
All in all, the treaty raises different questions: can the EU pursue geopolitical autonomy without sacrificing domestic cohesion? Can sustainability be credibly embedded in trade policy? And are large interregional agreements still politically viable in an era of fragmented consent and rising protectionism? Success would allow EU–Latin American relations to be reinforced for generations and strengthened a more multipolar balance. Failure would expose Europe’s difficulty in implementing its vision of the world.
Why does this matter ?
Because the EU–Mercosur deal is not just about tariffs. It is about whether rules-based cooperation can survive political pressure in a world drifting toward fragmentation. Understanding this tension is precisely why geopolitics matters. And I’ll leave a very telling quote from Canadian PM Mark Carney’s speech at Davos: “Middle powers must act together because if we're not at the table, we're on the menu”.
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