EU automakers and European metal call for a swift Mercosur deal ratification

The European Automobile Manufacturers' Association is calling on Members of the European Parliament to rapidly ratify the EU-Mercosur Trade Agreement, as European industries race to secure access to critical raw materials, including lithium and rare earth metals, essential for electric vehicle production and the continent's green transition.

"After over 25 years of negotiations, we are finally in sight of the finish line. We cannot afford to wait any longer," Acea stated, emphasizing how the agreement's ratification will allow Europe's engine of economic growth and prosperity "to be switched on and move ahead decisively."

On Jan. 17, the EU and Mercosur signed a Partnership Agreement (EMPA) and an Interim Trade Agreement (iTA), representing a historic milestone between the two regions after 25 years of negotiations.

According to an Acea document, the EU-Mercosur Free Trade Agreement would remove tariffs of up to 35% on vehicle imports, giving European manufacturers a crucial advantage over competitors. The European Commission estimates this could lead to a threefold increase in automotive exports to the region by 2040.

By 2040, according to DG Trade's calculations, the agreement is expected to add 77.6 billion euros to EU GDP, resulting in a 39% increase in EU exports to Mercosur.

"The Agreement will deliver substantial new commercial opportunities for companies across the EU, while supporting hundreds of thousands of EU jobs," the European Commission said in its statement. "The Agreement also sends a strong geopolitical signal, demonstrating the EU and Mercosur's shared commitment to multilateralism and the rules-based international order. At a time of global uncertainty and increasing fragmentation, this agreement underlines the value of cooperation, dialogue and international partnerships."

However, the true value of the deal extends beyond simple economics and includes more car exports. "For the EU, this is not just about trade - it's about securing strategic resources and counterbalancing global competitors," ING analysts wrote in their research paper.

By strengthening ties with Mercosur, the EU is positioning itself in an increasingly competitive race for critical raw materials alongside China and the US. According to ING, the deal supports "Europe's de-risking strategy from China, while introducing an element of allied competition with the US in Latin America. It highlights how access to critical raw materials is becoming a key pillar of global power competition."

Mercosur countries are major producers of key critical raw materials, including lithium, niobium, tantalum, and natural graphite, making the partnership strategically important for Europe's green and digital transition.

European Metals, the European non-ferrous metals association, welcomed the signature of what they called a major step in deepening the EU's objectives for a more resilient and diversified trade agenda.

Also according to European Metals, the EU-Mercosur Interim Trade Agreement (iTA) and the EU-Mercosur Partnership Agreement (EMPA) will be strategically important in securing diversification of sourcing and enhancing the stability of the EU supply chain, as they will open access to several critical and strategic raw materials in which Mercosur countries are rich, including lithium, niobium, manganese, and vanadium. These raw materials are crucial for Europe's green and digital transition and for strengthening EU competitiveness.

According to the EC, following the signature of the EMPA, the EU and Mercosur will now follow their respective procedures to work toward ratification of the agreement. On the EU side, the EMPA will be subject to ratification by all member states, following their national procedures. At the same time, the iTA will follow an EU-only ratification process as it falls under EU exclusive competences. This will require the consent of the European Parliament and the adoption of a decision on the conclusion by the Council, after which it will enter into force. The iTA will expire once the EMPA enters into force.