The European Commission and Mercosur countries announced the conclusion of a free trade agreement on Friday. This landmark deal creates a trade zone encompassing 780 million people. However, the agreement still requires approval from EU member states.
European Commission President Ursula von der Leyen made the announcement during a summit in Uruguay. She hailed the deal as “an ambitious and balanced agreement” and called it a “political necessity” alongside its economic benefits. Uruguay’s President Luis Lacalle Pou emphasized the agreement as an opportunity, cautioning that prosperity requires effort, not magic solutions.
Negotiators from both regions finalized the deal in Montevideo after more than 20 years of talks. Covering vast economic territories, the agreement will remove tariffs on goods like wine, cheese, automobiles, and clothing, while introducing quotas for sensitive products like beef, poultry, and sugar. Yet, it requires approval from all 27 EU member states, as well as the European Parliament.
Divided Responses Among EU Member States
Supporters of the agreement, led by Germany and Spain, see it as a pathway to new markets and influence in Latin America amid rising Chinese investments. German Chancellor Olaf Scholz described the deal as a step toward growth and competitiveness, while Spanish Prime Minister Pedro Sanchez pledged to push for its ratification.
Opposition to the deal remains strong, particularly from France, which has sought allies to block its approval. Poland joined this coalition, and Italy has made its support conditional on safeguards for farmers. Ireland, the Netherlands, and Austria also express doubts, signaling challenges ahead for ratification.
Addressing concerns, the Commission highlighted environmental protections integrated into the deal, including commitments to halt illegal deforestation in Mercosur countries. Provisions allow either party to suspend the agreement if these standards are violated. A phased-in approach over seven years for sensitive imports aims to protect EU markets from disruption.
French President Emmanuel Macron faces a delicate political situation with this development. His administration opposes the deal, citing environmental and agricultural concerns. Macron now faces the dual challenge of maintaining France’s stance on the agreement while rebuilding his government after Prime Minister Michel Barnier’s administration collapsed this week.
For supporters, the agreement represents an economic milestone. For critics, it symbolizes a potential threat to European farmers and environmental goals. Both sides now await the ratification process, which will determine the agreement’s ultimate fate.