The EU–Mercosur Agreement as a Test of European Coherence in Global Trade Governance

Between momentum and internal division

On 17 January 2026, European Commission President Ursula von der Leyen signed the Mercosur (Mercado Común del Sur) Agreement in Paraguay. Just a few days later, the European Parliament revealed divisions within the EU by 334 votes to 324, the agreement was referred to the European Court of Justice for review to examine whether it violates EU treaties. This delay could cost months or even years.  The agreement vividly illustrates how the EU’s internal divisions are becoming a serious threat to its ability to act and, consequently, to its role in the global order. This raises important questions such as: Why does the EU fail to speak with one voice in critical trade negotiations, and what must change before it is too late? After an introduction outlining the opportunities of the Mercosur agreement, the article analyzes the causes and dynamics of the EU’s internal divisions, concluding with concrete reform proposals aimed at creating a more capable and effective Union.

Economic Gains and Strategic Resilience: The Mercosur Agreement as a Pillar of European Autonomy

Since 1999 the EU has been negotiating with the Mercosur countries: Brazil, Argentina, Paraguay, and Uruguay. The negotiated Mercosur Agreement consists of the EU-Mercosur Partnership Agreement (EMPA) and the Interim Trade Agreement (iTA). On 9 January 2026, the iTA was adopted by the European Council and the European Commission, allowing the trade component of the agreement to enter into force. According to a note from the General Secretariat of the Council, the iTA was due to provisionally enter into force on 1 May 2026. This concludes the largest free trade agreement in the world in terms of population, covering a market of over 700 million citizens. The agreement brings significant fiscal advantages for EU member states through the elimination of many existing tariffs. This is particularly important for European goods such as cars, machinery, chemicals, and pharmaceuticals, as well as numerous agricultural products (Grieger 2025). With the abolition of Mercosur tariffs, the EU is expected to save exporters more than €4 billion annually in duties. Moreover, the agreement enables diversification and thus reduced dependence on individual countries, such as China. This is part of a broader strategy known as de-risking. Since 2023, this strategy has become one of the cornerstones of the EU’s economic security policy. In addition to the trade component of the agreement, the subsequent partnership component is also highly significant for the EU’s role in the international order and its future. In this context, the promotion of European values, such as human rights, democracy, the rule of law, and environmental protection, through their embedding in agreements such as the Mercosur agreement, is of particular importance.

Strategic Autonomy and Internal Division: The EU’s Balancing Act in the Mercosur Agreement

Alongside these advantages, however, there is also criticism from within, as some member states see risks for the competitiveness of domestic industries. This leads to a divide within the EU between proponents and opponents. According to reports by Tagesschau, France, Poland, Austria, and the Netherlands in particular have opposed the agreement with Italy also expressing concerns. The opposition among EU member states is primarily divided into agricultural protectionism (France, Poland, Ireland and Austria) and environmental policy motivations (Austria and the Netherlands). Here, domestic political pressure, exerted by the agricultural sector, environmental advocacy groups, and other interest groups, plays a significant role. There are concerns about economic disadvantages due to price undercutting, driven by higher production costs in EU countries and the perception that non-EU producers fail to meet EU standards, particularly in areas like animal welfare. This national pressure becomes especially decisive in EU-level decision-making when key elections are approaching, such as the 2027 presidential election in France and parliamentary elections in Poland. In such contexts, it often acts as a divisive factor in EU negotiations. Additionally, there was especially strong concern across national borders, that the Mercosur Agreement could contribute to increasing deforestation of the Amazon through rising exports and production. These concerns were particularly strong during Bolsonaro’s presidency (2019-2023) in Brazil but have diminished somewhat since Lula became president. While Bolsonaro relaxed environmental goals, Lula, for example, committed in Brazil’s updated Nationally Determined Contribution under the Paris Agreement to significantly stricter environmental protection measures, including zero illegal deforestation and the restoration of 6 million hectares of forest by 2030. In addition, Brazil was able to reduce deforestation by 45.7% in 2023 and 2024 compared to previous years. Due to the criticism mentioned above, renegotiations took place. From 2023 onwards, renegotiations have particularly incorporated rules on the environment and sustainability through the Trade and Sustainable Development Chapter with agreements including provisions that if a party withdraws from the Paris Agreement, this shall constitute grounds for exclusion from the Mercosur Agreement. In addition, a bilateral safeguard system was included, which can be activated if the domestic economy is threatened by excessively rising imports while the EU established a financial buffer of one billion euros to support EU farmers. In this way, after many years of negotiations marked by internal divisions and resulting in significant delays, criticisms were addressed in order to strengthen consensus among the member states.

Fragmentation and Beyond? Limits of European Decision-Making

The Mercosur Agreement shows how internal divisions within the EU, particularly driven by national interests and disagreements on certain issues, limit the EU’s ability to act . The blocking stance of countries such as France or Poland due to national interests and domestic pressure is a serious structural problem rather than an isolated case. Even though the EU has common institutions and treaties, its member states remain highly heterogeneous in their national objectives. In a rapidly changing international order and political environment, these lengthy EU decision-making processes cost too much time and have severe consequences. Countries such as China and the United States are more flexible and faster in their decisions and responses to new situations, while the EU is increasingly left behind due to its heterogeneity and slow decision-making procedures. The negotiations on the Mercosur Agreement are only one of many examples in which the EU takes too long to make decisions and is overtaken by its international competitors.

The division of the Mercosur Agreement into the comprehensive EMPA and the iTA was an emergency measure designed to make the EU more capable of acting in the international arena, at least ensuring the conclusion of the trade component. For the EMPA to enter into force, ratification by all EU member states is required following approval by the European Parliament. The iTA, by contrast, can enter into force without ratification by each individual EU member state. Through this emergency arrangement, however, national parliaments were effectively deprived of their veto power. Yet unity within the EU cannot be achieved by a majority imposing its will on a minority, but only by ensuring that potential “losers” are not left behind. The concerns and criticisms of individual nation states are important and legitimate and must be considered so as not to infringe upon their sovereignty. Future alternative approaches should lead to a unified position and prevent (or at least reduce) internal division.

Reforming European Trade Governance: Pathways toward Greater Coherence

Already today, so-called ex-ante Sustainable Impact Assessments (SIAs) are used by the Commission to examine projects and agreements, including the Mercosur Agreement. The problem is that the corresponding SIA and the risks it identified, for example, for the agricultural sector, were initially ignored. In the future, these analyses must be conducted early, and criticisms and concerns must be communicated and effectively addressed.

Moreover, there are already EU-wide funds for various areas, such as the Funds of the Common Agricultural Policy, but these are not yet specifically designed to address the potential negative consequences of individual agreements for European member states and sectors like agriculture. Their framework must be defined more specifically and at an earlier stage in negotiations to tackle the respective problems. This would allow criticism and obstacles to be addressed early, preventing negotiations from being delayed as long as they were with the Mercosur Agreement, in which the €1 billion for the agricultural sector was only determined in 2025. Specific funds should be structured as follows: At an early stage, an analysis should determine which countries and sectors are particularly affected, and corresponding compensation payments should be defined. Then, a fund should be established, financed (at least in part) by savings and financial gains resulting from the agreement. A certain percentage of these gains must flow into the fund to support countries and sectors facing (temporary) disadvantages due to the agreement. This must be institutionally established so that actions and processes for individual agreements proceed more quickly, as responsibilities are clearly defined.

Another option is to offer sectoral opt-out possibilities, allowing countries to exclude certain sectors from an agreement but contribute compensation payments to an EU fund. Using France as an example: France does not want to import beef from the Mercosur region. The French agricultural sector would be excluded from the agreement, while all other sectors would remain unchanged participants. The remaining importing countries would take over France’s import volume under the agreement, and France would make a compensation payment to the corresponding EU fund. This would mean a limited deviation from the common trade policy, but only a selectively restricted one.

After decades of negotiations, the Mercosur Agreement has sparked an important debate about Europe’s position in the global order and whether its member states are willing to make the necessary compromises and to pay the price to secure their position in a changing world. One thing is clear: the EU needs more unified structures, without overly restricting the sovereignty of its member states, to shorten lengthy decision-making processes to become faster and more adaptable in a globally competitive world.

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