EC advances Mercosur trade deal with new farmer safeguards

The European Commission advanced the EU-Mercosur Partnership Agreement for ratification Sept. 3, proposing new safeguard mechanisms to address farmer concerns over South American agricultural imports while promising unprecedented export opportunities for European companies.

The landmark trade deal, which would create the world's largest free trade zone covering over 700 million consumers, includes specific quotas allowing 99,000 mt of Mercosur beef and 180,000 mt of poultry into EU markets at reduced tariffs. The beef quota represents just 1.5% of total European beef production and is less than half of current Mercosur imports of 206,000 mt in 2024, according to the European Commission fact sheet.

The commission estimated the agreement could increase EU annual exports to Mercosur by up to 39%, worth Eur49 billion, while supporting more than 440,000 jobs across Europe. For agricultural exports specifically, the deal is expected to boost EU agri-food exports by almost 50% by eliminating high tariffs on key products including wine (up to 35%), chocolate (20%) and olive oil (10%).

Market implications

The agreement addresses long-standing European farmer concerns through a bilateral safeguard clause that could suspend preferential Mercosur access if import volumes rise by more than 10% or prices fall by that amount in EU member countries. The commission can take initial measures to limit imports within three weeks of receiving a complaint, according to Reuters reporting.

EU agri-food exports to Mercosur were worth Eur3.3 billion in 2024, according to the commission fact sheet. The deal will eliminate current tariffs on olive oil exports worth Eur600 million (currently 10% tariff), wine exports worth Eur238 million (up to 35% tariff) and chocolate exports worth Eur109 million (20% tariff). For dairy products, zero duties will gradually apply within quotas for 30,000 mt of cheese, 10,000 mt of milk powder, and 5,000 mt of infant formula.

The agreement also protects 344 EU food and drink products from imitation in Mercosur countries through geographical indications, including products like Prosciutto di Parma, Comté cheese and Tokaji wine.

French Trade Minister Laurent Saint-Martin said the safeguard clause was "a step in the right direction," while Polish Prime Minister Donald Tusk acknowledged his country no longer had partners to block the deal, making defense measures essential.

Ratification challenges

The deal requires approval from at least 15 of 27 EU member states representing 65% of the EU population, plus European Parliament consent. Ireland's EU Commissioner Michael McGrath urged member states to "keep an open mind" and assess the agreement "based on the facts."

However, farming organizations remain critical. Irish Farmers' Association President Francie Gorman called the commission's approach "hypocritical and contradictory," while the Irish Creamery Milk Suppliers Association described the proposal as a "calculated betrayal."

The commission has established a Eur6.3 billion crisis fund for EU farmers and maintains that all EU sanitary and phytosanitary standards will continue to apply to imported products. From the end of 2025, only deforestation-free products will be allowed into the EU market, including beef, soy and other commodities from Mercosur countries.

The agreement comes as the EU seeks to diversify trade relationships following US President Donald Trump's reelection and amid growing geopolitical tensions with China. Mercosur countries are seen as reliable sources of critical minerals for Europe's green transition, including lithium for batteries.