EU and Mercosur Seal Historic Trade Pact After 25-Year Negotiation
BERLIN, 21 January 2026 – The European Union and the South American Mercosur bloc have formally signed a landmark trade agreement, concluding negotiations that spanned more than a quarter century. The EU-Mercosur Partnership Agreement (EMPA), signed on 17 January 2026 alongside an Interim Trade Agreement (iTA), establishes what will become the world’s largest free trade area, covering approximately 780 million people.
A Long Road to Signature
The journey to this agreement began in 1999, with a political breakthrough achieved on 6 December 2024. The European Commission adopted formal proposals on 3 September 2025, followed by Council approval on 9 January 2026. The signing ceremony took place just eight days later, marking a significant geopolitical achievement for both blocs amid growing global protectionism.
The agreement faced substantial opposition, particularly from European farmers concerned about competition from South American agricultural imports. Violent protests in Brussels in December 2025 saw farmers block streets with tractors and clash with police. France, Italy, Poland, Hungary, Ireland, and Austria expressed reservations, with France leading opposition until additional safeguards were negotiated.
Key Provisions and German Interests
For Germany, Europe’s largest economy and a principal supporter of the agreement, the deal offers substantial opportunities. The agreement eliminates tariffs on 91% of all products, with particular benefits for Germany’s export-oriented manufacturing sector.
| German Sector | Export Value (2024) & Benefits |
|---|---|
| Machinery & Electrical Equipment | €5.3 billion; Current tariffs of 14-20% will be phased out |
| Chemicals & Pharmaceuticals | €4.1 billion; Tariffs reduced from 14-18% to 0% |
| Transport Equipment | €2.3 billion; Tariffs of 14-35% will be eliminated |
| Agri-food Products | €325 million; Current prohibitive tariffs up to 55% substantially reduced |
The agreement also protects 27 German Geographical Indications (GIs), including Bayerisches Bier, Allgäuer Bergkäse, Schwarzwälder Schinken, and several wine regions. This protection is expected to increase premium pricing for these products in Mercosur markets.
Safeguards and Agricultural Concerns
To address European farming concerns, the agreement includes strict quotas and safeguard mechanisms. Mercosur will have limited duty-free access for sensitive products: 99,000 tonnes for beef (1.5% of EU production), 180,000 tonnes for poultry (1.3% of EU production), and 25,000 tonnes for pigmeat (0.1% of EU production). A bilateral safeguard clause allows for temporary suspension of preferences if imports cause serious market disturbance.
The European Commission has established a €6.3 billion fund to counter potential harmful impacts on EU farmers and pledged early access to €45 billion from the 2028-2034 Common Agricultural Policy budget.
Geopolitical Significance
German Chancellor Friedrich Merz emphasised the agreement’s strategic importance, stating that failure to sign would damage EU credibility in global trade policy. The deal is widely seen as a counterbalance to Chinese influence in Latin America and a response to protectionist policies from the United States.
Brazilian President Luiz Inácio Lula da Silva and Argentine President Javier Milei, despite ideological differences, both strongly supported the agreement. Lula had warned that further delays might mean no agreement during his presidency, while Milei framed it as Mercosur becoming “a spear that allows us to effectively penetrate global markets.”
Next Steps: Ratification Process
While signed, the agreement now enters a complex ratification phase. The European Parliament must give its consent, with a vote expected in early 2026. The Parliament remains divided, with 269 MEPs rejecting a paragraph welcoming the agreement in October 2025 versus 259 in favour.
The agreement has been structured as two parallel instruments: the EMPA (a comprehensive association agreement) and the iTA (an interim trade agreement). This approach allows the trade provisions to proceed through EU-only ratification, potentially bypassing the need for unanimous approval by all 27 national parliaments for immediate implementation.
Frequently Asked Questions
What does this mean for German consumers?
German consumers may see slightly lower prices for some agricultural products like beef, poultry, and honey, though the quantities are limited by quotas. More significantly, German exporters gain improved access to Mercosur’s growing middle class, potentially supporting the estimated 6.7 million German jobs linked to exports.
How will this affect German farmers?
German farmers gain improved access to Mercosur markets where tariffs as high as 55% previously blocked exports. The agreement protects sensitive EU agricultural sectors through strict quotas and includes the first-ever safeguard clause covering products under tariff rate quotas. The Commission’s financial safeguards provide additional protection.
What are the environmental protections?
The agreement includes commitments to implement the Paris Climate Agreement, combat illegal deforestation, and preserve biodiversity. From the end of 2026, only deforestation-free products will be allowed into the EU market. However, environmental groups have criticised these provisions as insufficiently enforceable.
When will the agreement take effect?
The Interim Trade Agreement could take provisional effect following European Parliament approval, potentially within months. The full Partnership Agreement requires ratification by all Mercosur national parliaments and EU member states, a process that could take several years.