On September 3, 2025, the European Commission launched the ratification process for the EU–Mercosur Partnership Agreement (EMPA), a transformative deal to boost trade, agriculture, and strategic collaboration between the EU and Mercosur, a bold step towards a stronger, more connected future for both blocs. At a time when European businesses face mounting pressure to diversify supply chains amid geopolitical instability and escalating trade tensions with major partners such as the US and China, the agreement offers a new avenue for market access and resilience. On May 1, the trade parts of the agreement began to be applied provisionally by the two parties, pending final ratification on the EU side.
In this article, we explore the motivations behind the Commission’s decision to accelerate the conclusion of the agreement with the Mercosur countries. We then unpack the core of the Agreement, built on two pillars, Trade and Strategic Partnership, alongside the much-discussed safeguards for European farmers. Having gathered the most relevant reactions from stakeholders, the article explores possible opportunities for businesses under the agreement.
1) Between geopolitical instability and opportunism: the driving forces behind the EU-Mercosur agreement
After twenty-five years of negotiations, talks gained momentum following the July 2025 EU–US tariff agreement, which many in Europe regarded as highlighting the need to diversify trade relations.
These measures, coupled with concerns over China’s expanding presence in South America, prompted EU leaders to prioritise trade diversification, with Mercosur viewed as a natural partner given the depth of political, historical and commercial ties. However, reactions across Member States were mixed, with some expressing concerns over the deal’s impact on farmers.
France, particularly, emerged as the leading opponent, aiming to build a blocking minority in the Council. In response, the EU sought to address these concerns by proposing a package of measures to support European farmers.
Although France has eased its position amid political turbulence, it remains cautious.
Therefore, in the context of a push for diversification following the EU-US trade deal and amid France‘s political instability, the Commission’s decision to propose the text(s) of the EU-Mercosur agreement appears far from coincidental.
2) An agreement split in two
Interestingly, the Commission decided to split the agreement in two separate texts, in order to speed up the implementation process. The first text is the EU-Mercosur Partnership Agreement, covering political dialogue, cooperation, and trade in a single comprehensive deal and falling under mixed competence between the EU and Member States. The second, the Interim Trade Agreement (iTA), is commercial in nature and started to apply provisionally from May 1, 2026, until the full deal is ratified. It covers those parts of the agreement that are of exclusive EU competence, such as the much-debated rules on imports of agri-food from Mercosur countries. The deal addresses all of those barriers, both tariffs and non-tariffs barriers, that are seen as a limit for trade between the two regions. The agreement seeks to eliminate tariffs on over 90% of traded goods, gradually removing customs duties on vehicles, machinery, wine, and other products, and grants limited, carefully phased-in quotas for sensitive farm imports like beef, poultry, cheese, sugar, ethanol, honey, and rice, all while upholding EU sanitary and food-safety standards. The agreement also embeds bold climate action, by making the Paris Agreement an essential element, includes enforceable environmental and labour commitments, and enhances access to key raw materials crucial for the green transition under high sustainability criteria.
The rebalancing mechanism, a risk factor for regulatory stability
An important and contentious provision of the agreement is the rebalancing mechanism, which allows either party to challenge measures by the other that nullify or substantially impair the benefits of the agreement, even if those measures comply with the agreement’s text. If a new or amended regulation negatively affects a party’s exports, the affected party can initiate the agreement’s dispute settlement procedure.
A panel of experts would review the claim, and compensation could take the form of increased export quotas, reduced tariffs, or other trade concessions. Critics argue that the rebalancing mechanism could undermine the EU’s environmental and sustainability standards by allowing Mercosur countries to challenge regulations like deforestation laws or carbon border adjustments. For companies, it introduces uncertainty but also offers a potential avenue to contest discriminatory practices.
Additional safeguards for farmers
The Commission, alongside proposals to ratify the agreement, tabled a separate legal act to operationalise the Agreement’s bilateral safeguards chapter, aimed at appeasing Paris, Warsaw, and Rome, while reassuring European farmers and protecting the EU’s most sensitive agricultural sectors. Acknowledging that tariff-rate quotas may be insufficient, the act will require the EU executive to closely monitor markets for sensitive products (such as beef, poultry, and sugar), report to Parliament and Council every six months, and launch a safeguard investigation if imports rise by 10% or prices fall by 10%. An investigation could be triggered at the request of a single Member State, with the Commission empowered to impose provisional measures rapidly if significant harm is detected. Expected to be published soon on the Official Journal, the regulation would come to effect on the 20th day following its publication.
However, how to operationalise the safeguards with Mercosur partners without undermining the agreement’s application remains uncertain, given the need for bilateral coordination and the risk of disputes over trade commitments. For agri-food exporters, these safeguards could inject volatility into market access, even after tariff cuts take effect.
3) What are they saying about it?
While business associations welcomed the deal as a diversification and competitiveness opportunity, farmers and NGOs underscore its contested political pathway and the lack of safeguards over climate and animal welfare.
The Council gave the green light for the provisional application of the trade pillar of the deal through qualified majority on January 9, 2026, with France, Poland, Austria, Ireland and Hungary being the only Member States that voted against.
In the European Parliament (EP), several political groups including the ECR, the Greens and the Left, have expressed their firm opposition to the agreement. On the other hand, key trade MEPs, such as Bernd Lange (S&D, Germany) and Jorgen Warborn (EPP, Sweden) have highlighted the benefits of the agreement. Most notably, through a Plenary voted on a resolution seeking an opinion from the EU Court of Justice (CJEU) on the legal validity of the EU-Mercosur deal. The Members of the Parliament argue that the rebalancing mechanisms and the provisional application of the trade aspects of the deal without prior Parliament’s consent violate EU law.
4) Next steps: legislative process
The two texts are following different legislative processes, as they have different legal bases. On one hand, the EU–Mercosur Partnership Agreement (EMPA) will need to be approved by both the European Parliament and unanimously by all Member States in order to be officially ratified.
On the other hand, the Interim Trade Agreement (iTA), has been provisionally applied since May 1 2026; and will require the European Parliament’s approval for final ratification.
5) Seize the advantage: new opportunities for your business
The Agreement opens significant opportunities across sectors such as agribusiness, automotive, manufacturing, technology, energy, and more, offering wider market access and smoother regulatory processes. For example, automotive and machinery could benefit from tariff elimination (35% on cars, 14–20% on machinery); agri-food and wines/spirits will gain access to 295 million consumers, though quotas and safeguard triggers will require careful monitoring; and technology and services stand to benefit from procurement and services liberalisation, particularly in ICT, telecoms, and financial services. Businesses that act early can gain a competitive edge, but understanding the deal’s rollout, sector-specific impacts, and compliance obligations is crucial.
While the opportunities are considerable, key risks remain. These include the uncertainty of securing approval from both the European Parliament and Member States, particularly in light of the upcoming Irish presidency of the Council — a country historically opposed to the deal.
Moreover, the uncertain verdict of the CJEU case brought forward by the Members of the Parliament remains a knot to untie, as does the possible market volatility in agriculture due to the safeguard mechanisms activation.
As such, companies should closely monitor the full ratification process and the impact of the deal’s provisional application on their operations and develop scenario plans to respond swiftly to any outcome.
Our Brussels-based expert team is ready to help you navigate these changes, anticipating regulatory timelines, mapping stakeholders, and aligning your corporate strategy with the EU’s evolving trade agenda, so you can capture opportunities, mitigate risks, and position your business for success in a dynamic trade landscape.
Juliette Olivier, Senior Public Affairs Consultant
Alessandro Pizzi, Public Affairs Consultant