Signed, But Not Yet Settled: What the EU-Mercosur Agreement Means for Latin America

On 17 January, the agreement between Mercosur and the EU was signed in Asunción, Paraguay. One of the most crucial agreements of the decade, it aligns the commercial interests of two international markets and brings opportunities for import and export in a global context that seems to insist on closing its borders.

The changes, and the agreement itself, entered into force officially on 1 May, after more than twenty years on hold and a difficult beginning with countries like France, Poland, and Hungary, which tried to hold back and delay the outcome of the negotiations.

Now, an internal process will be driven in each country for the application of the agreement. While this was an open debate between nations that expressed their opinions openly, each government still has to approve the integration of the agreement by passing it through a vote in their Senates.

Brazil, Argentina, and Paraguay have been actors that expressed their support throughout the entire process, and recently each one approved the provisional EU-Mercosur Agreement internally. This includes tariff reductions, access to new markets, and improved trading conditions between the parties.

Next Steps

Many companies in Latin America were already exporting their products to European countries, meaning that one of the first changes will be a significant reduction of 92% on the costs of imported inputs, increasing their productivity and competitiveness. And while the specifics of the agreement are clear, many companies still don’t know exactly how it’s going to impact their export operations and costs.

Governments are far from being clear about the process, mainly because it starts a long period of legal documentation, analysis, and setbacks that will need to be checked over and over again, which could take months or even years.

While nobody can be certain about how much time this process could take, many have looked to previous agreements. For example, one signed years back between Canada and the EU —the Comprehensive Economic and Trade Agreement, also known as CETA— served similar purposes of removing tariffs. It took four years from the “Agreement in Principle” stage to the “Provisional Application”.

The global discussion about the topic has now shifted into internal and more precise discussions on how to get the most out of the agreement. Much of this advantage seems to lie in applying it as soon as possible. Argentina and Uruguay were the first countries to sign it, while the European Parliament is still awaiting final ratification.

There is a legal avenue for the trade component to begin operating much sooner. This possibility, grounded in both the Treaty on the Functioning of the European Union (TFEU) and the Interim Trade Agreement (iTA) itself, could particularly benefit Argentina.

Since it can be provisionally applied as of 1 May 2026, bypassing full ratification to allow trade provisions —such as tariff reductions on 90% of goods— to start immediately. Grounded in Article 218(5) TFEU and international law, this allows the deal to operate after Council approval and once at least one Mercosur state ratifies it.

This agreement sets an unprecedented record for future negotiations and partnerships between countries. Europe represents around 20% of the world economy and a third of global imports, and all the countries that signed free trade agreements with the EU multiplied their FDI several times.

The agreement also opens channels of communication between countries to ensure cooperation in key areas such as animal welfare, biotechnology, food safety, and combating antimicrobial resistance (AMR).

While huge progress has been made, an unknown amount of time may pass while the different governments align their views on the subject and start to see the first impact of years of discussions.