The EU began negotiations with South America’s Mercosur on a trade agreement in 1999. It is therefore easy to overlook how much progress has been made. In early January, the European Council authorized the signing of a partnership agreement with this South American trade bloc, whose members include Brazil, Bolivia, Argentina, Uruguay, and Paraguay. It is not yet final – it must be ratified by the European and national parliaments – but it could be the beginning of the end.
The agreement consists of two parts (an interim agreement and a partnership agreement), the first of which is approximately 1,100 pages long and the second 2,300 pages long, with 23 chapters and nearly 50 annexes. This is by no means a document that says, “We are abolishing all mutual tariffs and non-tariff barriers – sign here.” Yes, this agreement will lead to lower tariffs. But it is extremely complicated.
At first glance, this appears to be a more favourable deal for the EU. The average EU tariff is currently less than 5%, while Mercosur’s is around 12%. In some sectors, it is much higher; for example, South Americans impose a 35% tariff on car imports and 18% on chemicals. We could pretend that this is a “food-for-industry” type of agreement. Food commodities are a significant export item for Mercosur, excluding exports of minerals and fossil fuels, which are subject to zero tariffs.
But we cannot pretend that this is the case. These negotiations have been going on for more than a quarter of a century for a reason. Specifically, dozens of lobby groups have pushed through a huge number of rules, exceptions, and conditions.
The agreement has a gradual start. One example among many – Mercosur will gradually remove tariffs on car imports over 15 years (18 years for electric cars!) with an initial quota of 50,000 (!) units per year. On the EU side, too, there are still a number of quotas, particularly on food. Because of these, Mercosur will only be able to import around 2–3% of European food production into the EU duty-free.
All this is wrapped up in a multi-layered web of compliance with standards, particularly environmental and phytosanitary ones. These rules already existed, so the agreement provides a more solid framework for their application.
The result is an expected saving of a meager €4 billion in customs duties per year for European producers and an estimated acceleration of economic growth by 0.02–0.1% per year. We can say that this is better than nothing. However, instead of a free trade agreement, we have an agreement on more transparent regulations. To me, this represents the untapped potential of 27 years of effort.
Originally published in Hospodárske noviny, 18 January 2026
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