EU moves ahead with Mercosur trade deal despite legal review

European Commission President Ursula von der Leyen announced Feb. 27 that the EU will proceed with the provisional implementation of its trade agreement with the Mercosur bloc, after Uruguay and Argentina ratified the deal on Feb. 26.

The agreement includes a duty-free import quota of 450,000 metric tons/year of non-fuel ethanol and 200,000 mt of fuel ethanol at a tariff rate set at one-third of the most favored nation rate, phased in over six annual stages.

"In addition to ignoring the vote by the European Parliament to ask the EU Court of Justice to review the legality of the deal, the Commission is also ignoring repeated warnings from sensitive agricultural sectors like European bioethanol producers and has now offered Mercosur countries, in reality, to Brazil, a huge share of the EU's ethanol market. In doing so, the EU is putting at risk European biorefineries producing food, feed, fuel, fertilizers and much more," said ePure, the European Producers Union of Renewable Ethanol, in a statement released Feb. 27.

The European Industrial and Beverage Ethanol Association, iEthanol, said, "Before any tariff concessions take effect, it must be ensured that the safeguard regulation is formally adopted and legally in force."

The EU agreed on safeguards to protect sensitive products from imports from Mercosur, which comprises Argentina, Brazil, Paraguay, Uruguay, and Bolivia. This includes ethanol and sugar.

An undercut price of 5% per product, combined with a 5% increase in preferential import volumes over an average of three years, or a 5% drop in import prices, would prompt an investigation for a potential suspension of products for that market.

Europe's imports of denatured and undenatured ethanol from Brazil have been declining since 2023. In 2025, denatured imports were 62,163 cubic meters, down 80% from 2023, and undenatured volumes fell to 47,159 cu m, 36% lower than 2023, according to S&P Global Horizons data.

Platts, part of S&P Global Energy, assessed European ethanol FOB Rotterdam at Eur685.25/cu m on Feb. 27.

The deal remains contentious as it has not received official approval from the European Parliament. Last month, lawmakers voted to refer the deal to the Court of Justice of the European Union for review, which effectively delays its final ratification for up to two years.

Von der Leyen defended her decision, saying she had consulted extensively with EU member states and lawmakers before acting. She stated the move was necessary to secure "a strategic first-mover advantage in a world of sharp competition and short horizons. But a first-mover advantage has to materialize."

French President Emmanuel Macron, who opposed the deal before being outvoted in January, criticized the decision. He accused the EC of making a unilateral choice to implement Mercosur without the input of EU lawmakers.