Developments in Mercosur could call the entire EU agreement into question

Legislative proposals for the treaty have been submitted to the Mercosur parliaments. In Brazil, the agricultural sector wants improvements, and Argentina has concluded a trade agreement with the US that conflicts with the agreement with the EU.

by Alexander Busch, Latin America correspondent for Handelsblatt and Neue Zürcher Zeitung

First, the good news: the Argentine Chamber of Deputies is the first legislative body in Mercosur to approve the agreement by a large majority. The bill must now also be voted on in the Senate. This marks the first step toward ratification of the agreement between the EU and South America’s largest economic community, Mercosur.

Similar bills have also been introduced in the parliaments of the other Mercosur countries, Brazil and Uruguay. Paraguay plans to follow suit soon. In Uruguay, parliamentarians hope to approve the bill by the end of February. This would be an important step toward bringing the trade part of the agreement into force.

This is because the EU could provisionally apply the EU-Mercosur agreement as soon as the first Mercosur country has completed the ratification process. In Europe, the agreement, which was signed on January 17, 2026, was halted again just four days later. On January 21, the European Parliament decided to refer the agreement to the European Court of Justice (ECJ) to examine whether it is compatible with EU treaties and legal standards. This step delays the pending final parliamentary approval by at least a year.

Nevertheless, the agreement between the EU and Mercosur is now also facing new resistance in South America, which could ultimately call the treaty into question.

The Brazilian Congress has rejected the government’s plan for rapid ratification. A commission made up of members of the Senate and Congress will decide whether to introduce similar safeguard clauses for farmers in Mercosur to those that European farmers were able to include in the agreement as an additional protocol in the days before it was signed.

Among other things, this involves the EU activating temporary protective measures in the event of changes in export volumes or prices of more than five percent. The South American farmers’ association considers this unrealistic given the highly volatile nature of agricultural commodities and is also demanding such a safeguard clause.

However, the Agreement on Reciprocal Trade and Investment (ARTI) just concluded between Argentina and the US could have far more serious consequences for the future of the EU-Mercosur agreement. Argentina and the US signed it on February 5. It mainly concerns tariffs, market access, investment rules, and regulatory requirements, which also play an important role in the EU-Mercosur agreement.

The plan is for Argentina to be able to import numerous products into the US duty-free from March onwards, including sensitive agricultural products such as beef. The EU strongly protects this access. Agricultural imports from South America are meeting with massive resistance from farmers from France to Poland in the agreement with the EU.

At the same time, US companies will be allowed to export numerous industrial goods – including pharmaceuticals, vehicles, and machinery – to Argentina duty-free. It is precisely these markets that European companies hope will bring them trade advantages through the EU-Mercosur agreement.

US norms and standards are also to be adopted in Argentina without further review. North American companies will receive privileged access to rare earths and critical minerals in Argentina. Here, too, the EU had hoped for preferential treatment in the agreement.

It is now completely unclear whether a bilateral agreement between Argentina and the US could break up Mercosur. According to its statutes, the South American economic community must negotiate jointly with new partner countries. However, it recently expanded the number of possible tariff exemptions for Argentina.

In Brazil, which accounts for around two-thirds of Mercosur’s economic power, consideration is now being given to how Brasília should respond to Argentina’s solo effort. However, formal criticism of Argentina would probably do little to dissuade libertarian President Javier Milei from his policy of opening up to the US. At the same time, there are also considerations in Brazil as to whether a bilateral agreement with the US would not bring more advantages than an agreement within Mercosur.

For influential economist and former foreign trade secretary Lucas Ferraz, the latest developments put Mercosur’s existence at stake. This also suddenly makes the agreement with the EU uncertain again.