GA‑Alliance Shares Key Takeaways on the EU–Mercosur Agreement
3 February 2026

GA‑Alliance – Global Legal and Tax Advisors presents the latest developments on the EU–Mercosur Agreement following its international webinar “The EU–Mercosur Agreement and the Future of Transatlantic Business”, held on 22 January 2026. The discussion brought together experts from Europe and Latin America to assess the agreement’s practical impact on companies, trade flows, and regulatory frameworks across both regions.

Signed on 17 January 2026, the EU–Mercosur Partnership Agreement introduces wide‑ranging commitments, from significant tariff reductions to strengthened sustainability, SPS and intellectual‑property provisions, as outlined by GA Alliance. Speakers highlighted the geopolitical relevance of the agreement, its potential to diversify EU supply chains, and the opportunities it creates in sectors such as energy, agribusiness, industrial production, and services.

GA‑Alliance continues to monitor the institutional process, including the pending review before the European Court of Justice, and provides integrated guidance to businesses navigating the evolving regulatory landscape.

A detailed briefing with country‑specific insights and legal analysis is available here: click to access the full document.

EU-MERCOSUR AGREEMENT: The future of transatlantic business

Table of Content

• Executive Summary
• State of the Agreement and Institutional Process
• Strategic relevance of the agreement for the EU
• Legal, trade and sustainability aspects
• Country perspective and sectorial implications
• Conclusions

Executive Summary

This document provides an update on the status of the EU–Mercosur Association Agreement following the seminar organized by GA-Alliance – Global Legal and Tax Advisors together with its partners in South America, held during the webinar on 22 January 2026 entitled “The EU–Mercosur Agreement and the Future of Transatlantic Business.”

The webinar event brought together GA Alliance professionals from Europe and Latin America, confirming the Alliance’s role as an international platform capable of connecting the two continents and offering an integrated analysis of the main developments in international trade, regulation, and tax strategy. The panel — made up of experts from Italy, Argentina, Brazil, Paraguay, Uruguay, Venezuela, and Colombia — discussed the practical significance of the agreement for European and Latin American businesses, examining commercial, regulatory, and operational implications.

The webinar also highlighted that the agreement, politically concluded after more than 25 years of negotiations, represents far more than a tariff deal: it introduces new sustainability standards, rules on intellectual property, procurement opportunities, and a regulatory framework that will reshape the economic axis between the EU and Mercosur. The gradual elimination of over 90% of customs duties could generate significant benefits for European and Italian exports, estimated at more than €14 billion.

GA Alliance, leveraging its global presence in over 80 countries and a multidisciplinary team of more than 2,600 professionals, continues to monitor developments in the agreement, offering an integrated perspective on the impacts for economic operators and investors, and translating a complex debate into concrete guidance for international stakeholders.

State of the Agreement and Institutional Process

The EU-Mercosur negotiation process began in 2000, following earlier exploratory dialogues and cooperation frameworks dating back to the 1990s. After years of intermittent negotiations, the parties reached a political agreement on 6 December 2024 on a comprehensive Partnership Agreement (EU-Mercosur Partnership Agreement, or “EMPA”), covering trade, political dialogue, cooperation and sustainable development.

Subsequently, on 3 September 2025, the European Commission adopted proposals for the Council to authorise the signature and conclusion of two parallel legal instruments: the EMPA and an Interim Trade Agreement (“iTA”), designed to allow trade commitments to be applied ahead of the full EMPA’s entry into force.

On 9 January 2026, the Council of the European Union formally adopted the decisions authorising the signature of both the EMPA and the iTA.

The agreements were signed on 17 January 2026 by representatives of the EU and the Mercosur countries (Argentina, Brazil, Paraguay, and Uruguay) in Asunción, Paraguay.

At this stage, the EMPA and the iTA are concluded instruments. However, their entry into force depends on further procedures: the EMPA must be ratified by all EU Member States and Mercosur legislatures, while the iTA will enter into force once the European Parliament gives its consent and the Council concludes it.

Currently, EU ratification of the agreement is suspended pending review by the European Court of Justice following a referral by the European Parliament in January 2026 over questions related to legal competence, the precautionary principle, and the structure of the agreement, a process that may take up to approximately 18-24 months.

Strategic relevance of the agreement for the EU

From the perspective emerging during the seminar, the EU-Mercosur Agreement was presented as a legal, political and institutional instrument with clear geopolitical relevance, capable of reshaping long-term economic leadership through rule-based cooperation.

Beyond trade liberalisation, the agreement was framed as a tool to reinforce the EU’s strategic presence in South America at a time of mounting global fragmentation and intensified competition from China. In an increasingly unstable geopolitical environment, the EU must diversify not only its export markets but also its sources of imports, while establishing solid contractual ties with reliable partners.

The Mercosur region comprises approximately 300 million inhabitants and represents a major trading area. The EU is Mercosur’s second-largest trading partner, while Mercosur is the EU’s tenth-largest trading partner. Historically, the EU remains the largest investor in the region, with European companies operating in Brazil and Argentina for over a century. In 2024, the EU accounted for 16.8% of Mercosur’s total trade. EU exports to Mercosur amounted to €53.3 billion, while Mercosur exports to the EU totalled €57 billion.

Mercosur’s main exports to the EU consisted primarily of agricultural products (42.7%), mineral products (30.5%), and pulp and paper (6.8%), whereas EU exports were dominated by machinery (28.1%), chemicals and pharmaceuticals (25%), and transport equipment (12.1%). In the services sector, in 2023 the EU exported €28.5 billion to Mercosur, while Mercosur exported €13.1 billion to the EU.

The agreement is structured around four main pillars (trade, investment, sustainability and cooperation) and is expected to generate estimated tariff savings of around USD 4 billion per year. The schedule of commitments reflects an asymmetric and gradual approach, with Mercosur granted up to 15 years to dismantle tariffs on around 90% of imports, while the EU would liberalise approximately 93% of imports from Mercosur within 10 years.

Over the long term, the agreement is expected to support industrial production, facilitate access to capital goods, enable accumulation of origin between the two blocs and foster intra-bloc trade, with positive GDP effects projected towards 2040.

Legal, trade and sustainability aspects

Food safety and sanitary and phytosanitary (“SPS”) controls are integrated into the agreement’s operational framework.

The EU already imports beef and other products from Mercosur countries, and the agreement maintains existing EU sanitary legislation while intensifying border checks. Only authorised slaughterhouses may export to the EU, subject to 100% documentary controls, supported by a rapid alert system among Member States and bilateral safeguard clauses to prevent sudden import surges or price collapses. The EU has also doubled available crisis funds for the agricultural sector.

Legal certainty is reinforced through references to the precautionary principle and WTO-aligned SPS measures, while the rebalancing mechanism (modeled on GATT framework) provides a structured dispute resolution pathway, allowing a party to request compensation if measures nullify expected benefits. These mechanisms underpin both predictability and enforceability, contributing to the robustness of the agreement.

Sustainability commitments are central, including legally binding obligations to halt deforestation and align with the Paris Agreement, Sustainable Development Goals, and Glasgow Leaders’ Declaration on Forests. The agreement also provides a platform for dialogue on the EU Deforestation Regulation and wider environmental initiatives.

Country perspective and sectorial implications

While the EU-Mercosur agreement sets a common framework, its economic and regulatory impact varies significantly across the member countries, reflecting differences in population size, industrial structure, and trade policies. Understanding these national perspectives is essential to grasp the practical implications of the agreement and the opportunities it creates for trade, investment, and sustainability initiatives.

• Paraguay benefits from extensive differentiated treatment designed to bolster its domestic processing and service sectors. The agreement grants an exclusive 10,000-tonne quota for organic sugar at a zero-percent tariff, alongside preferential 5% duties for critical auto part designations. To ensure stability, the framework provides extended timelines for trade defense and sanitary measures, including a two-year extension of the Generalised Scheme of Preferences (“SGP”) conditions for key exports like corn and yerba mate. By preserving national policy space for public procurement and amplifying service exclusions, the agreement facilitates integrated value chains in biofuels, honey, and oilseeds while fostering a robust market for sustainability certification services.

Argentina is positioned as a relevant dual energy partner for Europe, offering immediate and long-term solutions to the continent’s energy needs. In the short term, the country is set to supply natural gas and LNG from the Vaca Muerta formation under stable, long-term contractual arrangements. Looking ahead, the focus shifts to the renewable energy sector and green hydrogen, underpinned by the extraction of critical minerals such as lithium and copper. These initiatives are closely aligned with Europe’s decarbonisation agenda and are supported by the “Global Gateway” initiative. This framework facilitates technology transfer and attracts European investment into projects that strictly adhere to Environmental, Social, and Governance (“ESG”) standards.

Brazil, with over 210 million inhabitants, represents most of the Mercosur’s population and a leading global agricultural exporter. The agreement is broadly compatible with existing practices among large companies already aligned with EU standards, though smaller firms may need to adjust. Key improvements include the simplification and digitalisation of customs procedures, the mutual recognition of certifications, and a potential reduction of the “custo Brasil.” by mitigating the structural and bureaucratic burdens that historically inflate the cost of operations in the country. Additionally, the agreement fosters enhanced competitiveness through interactions with the current VAT reform. The analysis also covered consumer prices and investment decisions across sectors such as machinery, vehicles, fertilisers, and food and beverages.

Conclusions

GA-Alliance’s seminar showcased the value of practitioner-led, cross-regional analysis in breaking down the legal and economic complexities of the EU-Mercosur agreement. By providing a bridge between policy and practice, the discussion translated high-level trade objectives into concrete opportunities for the private and public sectors.

• The EU-Mercosur agreement constitutes a strategically significant instrument to reinforce the EU’s global competitiveness, diversify trade and supply chains, and secure access to critical resources and energy supplies.
• The agreement establishes robust legal, trade and sustainability mechanisms, including precautionary and SPS measures, rebalancing provisions, and enforceable climate and deforestation commitments.
• Differentiated treatment for specific Mercosur countries, combined with sectoral and investment provisions, supports agribusiness, energy transition, industrial production, and integrated value chains across the region.
• The agreement offers measurable long-term economic benefits, including tariff reductions, market access, investment opportunities, and enhanced cooperation on environmental and sustainability objectives.

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3 February 2026

Bruxelles

Cross Border Investment in Latin America

Event 22 Gen 2026 |16:00 – 18:00 | Webinar by GA-Alliance

Online Webinar Event

The finalized EU-Mercosur agreement is much more than a trade deal; it is a shift in the global regulatory landscape. For European companies, it represents the removal of billions in tariffs; for the legal and fiscal world, it introduces a complex web of new sustainability standards, intellectual property rules, and procurement opportunities.

Join us for this online workshop taking place on January 22, 2026, at 4.00pm (CET/GMT+1). We won’t just tell you what the agreement says – we will tell you what it means for your bottom line and how to position your business to thrive in this new economic corridor.

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LINK AL WEBINAR

Join us for this online workshop taking place: On January 22, 2026 At 4.00 pm (CET/GMT+1) Link Webinar  SPEAKERS Francesco Sciaudone, Global Managing Partner, GA-Alliance Eduardo Savarese, Of Counsel, GA-Alliance Italy, Full Professor of International Law, Università Federico II, Naples Daniel Fesler, Partner, GA-Alliance Brussels Jose Allonca, Partner, GA-Alliance Argentina Pedro Drummond, Partner, GA-Alliance Brazil Hanna Lauar, Associate, GA-Alliance Brazil Jorge Figueredo Klein, Partner, GA-Alliance Paraguay Jonas Bergstein, Partner, GA-Alliance Uruguay Simón Guevara, Partner, GA-Alliance Venezuela Juan Carlos Moncada, Partner, GA-Alliance Columbia

EVENT INVITATION : The EU-Mercosur agreement and the future of transatlantic business

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About GA-Alliance

GA-Alliance – an international law and tax firm with a global network spanning 80 countries and a team of over 2,600 professionals – is uniquely positioned to bridge these two worlds. Our multidisciplinary expertise allows us to navigate the intersection of international trade law and cross-border tax strategy with unparalleled precision.

Find us in the LATAM Area:

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Uruguay

This analysis provides an overview of the current state of the EU–Mercosur Agreement and explains the transition from negotiation to ratification, marking the beginning of a new and politically sensitive phase.

Against this background, attention is first devoted to the institutional dimension, where the recent formal authorisation by the EU Council to proceed with the signature of the agreement signals a renewed momentum at EU level, while at the same time leaving unresolved a series of significant political and legal challenges that are likely to shape the forthcoming ratification process.

The analysis then turns to the legal architecture of the agreement, providing a concise analysis of the two legal instruments that together constitute the agreement: the “Interim Trade Agreement” and the “EU–Mercosur Partnership Agreement”. This section delineates briefly the respective scope and objectives of each instrument and underscores their fundamental distinction, the fact that they are subject to two different ratification procedures.

The following section turns to the issue currently at the centre of the political and institutional debate, namely the potential recourse to provisional application. It focuses on the legal basis enabling the early implementation of trade-related provisions, while also examining the reasons why this option continues to give rise to significant controversy. In this context, particular emphasis is placed on concerns expressed by the European Parliament regarding democratic oversight and institutional balance, as well as on the asymmetric nature of the enforcement mechanisms governing trade obligations as compared with those applicable to sustainability- and climate-related commitments.

The discussion continues considering the positions of Member States and economic stakeholders. It outlines the strong support expressed by export-oriented industries, which anticipate rapid and tangible economic gains, alongside persistent resistance from agricultural producers and a few Member States concerned about potential market disruption, regulatory divergence, and adverse environmental effects.

The final section provides a forward-looking evaluation of where political and institutional attention is expected to concentrate in the coming days and months. It points to the role of the European Parliament, including possible legal initiatives and forthcoming approval decisions, as well as to the choices that may be exercised by the Council regarding provisional application.

Going forward, close attention will be required as developments unfold, given that the forthcoming steps are likely to shape the timing, trajectory and long-term political sustainability of the EU–Mercosur Agreement.

INDEX

• The Latest Institutional Development
• The Interim Trade Agreement
• The EU-Mercosur Partnership Agreement
• The Provisional Application and the position of the EU Parliament
• The position of the Member States and Industries
• What to expect

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The Latest Institutional Development

After years of intermittent progress, in early 2026 the EU–Mercosur agreement decisively returned at the top of the European agenda.

The last few days have clarified two things at once: institutional momentum is real, as the European Union has formally paved the way for signature, but the most difficult political challenges now lie in the ratification phase, which could still slow or, for some experts, reshape the path to entry into force.

On 9 January 2026, the EU Council approved the signature of the EU–Mercosur comprehensive partnership and trade agreement package which includes:

• the Interim Trade Agreement (“iTA”).
• and the EU-Mercosur Partnership Agreement (“EMPA”),

Although both are integral components of the same agreement, these two components will follow different institutional procedures. The trade provisions will advance under EU exclusive competence, while the broader Partnership Agreement has been qualified as a mixed agreement.

In practical terms, under Article 218(6) TFEU, both acts must first be approved by the European Parliament but only the EMPA will also be subject to ratification by all Member States.

This “split approach”, as designed by the Commission and endorsed by the Council, was intended to advance the trade agreement, limiting legal and political friction, but it has also fuelled controversy over provisional application, i.e. the possibility of applying trade provisions before full parliamentary approval.

As a result, the process is still far from concluded.

The Interim Trade Agreement

The Interim Trade Agreement is focused on trade and investment liberalisation. It will operate as a separate agreement until the full EMPA comes into force.

Its main goal is to deliver economic benefits as quickly as possible. Indeed, the agreement provides tariff reductions and new market access for a wide range of goods and services. It also includes measures to facilitate investment and to reduce barriers to cross-border trade in services. Furthermore, it includes rules on government procurement which will allow EU companies to take part in public tenders in Mercosur countries.

Under EU law, the Interim Trade Agreement is considered to fall under the European Union’s exclusive competence. Pursuant to Article 218(8) TFEU, this allowed the Council to decide by qualified majority and removed the need for national ratification at this stage. On this legal basis, the Council decision of 9 January formally authorises the signing of the agreement on behalf of the European Union.

Commission President Ursula von der Leyen and European Council President António Costa are already preparing to travel to Paraguay, which currently holds Mercosur’s rotating presidency, to sign the agreement probably within the end of the week.

Then, while the European Parliament cannot amend the text, it must decide whether to approve or reject it. The vote is expected to be finely balanced, with Members of the European Parliament likely to vote more along national lines than according to political affiliation.

However, ahead of the vote, MEPs are expected to decide whether to request a legal opinion from the Court of Justice of the EU on the legality of the split approach and the classification of the Interim Trade Agreement as falling under EU exclusive competence. The proposal, first tabled in November 2025 by 145 MEPs, was temporarily blocked pending clarification of the Council’s position. Now, the vote could take place during the next plenary session, starting on 19 January. If approved, the request would likely delay ratification, but it would not necessarily prevent the provisional application of the trade provisions, should the Council decide to proceed.

The EU-Mercosur Partnership Agreement

The EMPA establishes a single framework for political dialogue, cooperation, and sectoral engagement between the parties, including a trade and investment pillar that will apply once the agreement enters into force. It aims to strengthen cooperation in key areas such as sustainable development, climate action, digital transformation, human rights. Lastly, the agreement promotes closer coordination on global challenges and supports the exchange of best practices, while reinforcing coordination in multilateral fora.

As said, the Partnership Agreement qualifies as a mixed agreement under Article 217 TFEU. It means that, after the EU Parliament vote, the broader partnership elements would require also national ratifications in EU member states.

The Provisional Application and the position of the EU Parliament

The most debated topic in recent days surrounding the EU-Mercosur Agreement concerns the possibility of its provisional application.

After the signature in Paraguay, under Art. 218(5) TFUE, the Council may decide to provisionally apply the Interim Trade Agreement even before the European Parliament has expressed its vote on it.

Provisional application would be a turning point because it allows key market-access commitments, such as tariff reductions, to apply before the whole Agreement is formally concluded and fully ratified.

The EU Parliament still retains the right to approve or reject the deal later but many MEPs fear that putting the agreement into practice first and asking for political approval afterward, would weaken democratic scrutiny.

Moreover, it has been argued that provisional application creates an inherent asymmetry. Economic benefits can take effect quickly, for example through the immediate reduction or elimination of tariffs, and these commitments are supported by strong enforcement mechanisms, including binding dispute settlement and the possibility of trade retaliation. By contrast, sustainability and climate-related commitments, such as labour and environmental standards, are subject to weaker enforcement, as they rely on dialogue and expert-based procedures rather than trade sanctions.

For these reasons, in response to the European Commission’s proposal, the European Parliament adopted, on 16 December, a position focused on strengthening the rules governing the implementation of the trade agreement:

• It adopted a position on bilateral safeguard measures aimed at preventing imports from Mercosur countries from causing serious injury to the EU agricultural sector. The approved text allows the EU to temporarily suspend tariff preferences for sensitive agricultural products, notably poultry and beef, originating from Argentina, Brazil, Paraguay and Uruguay.
• The Parliament also tightened safeguard activation conditions by lowering import increase thresholds and significantly shortening investigation timelines, enabling faster intervention in cases of market disruption.
• In addition, it introduced a reciprocity mechanism requiring the Commission to act where credible evidence shows that imports benefiting from tariff preferences do not comply with equivalent EU standards in areas such as environmental protection, animal welfare, food safety or labour conditions. This broadens the legal basis for safeguards beyond purely quantitative market effects.

Finally, on 18 December, Parliament and Council negotiators reached an informal agreement on the main parameters of the safeguard legislation. The provisional compromise clarifies the definition of serious injury, strengthens import- and price-based monitoring thresholds, improves data exchange between Member States and the Commission, and reinforces continuous market surveillance. Although still subject to formal adoption, this agreement aims to significantly increase legal certainty regarding the operation of safeguards once tariff concessions take effect.

However, at the beginning of 2026, the latest Council’s decision, which kept the option of provisional application open, once again fuelled scepticism, as it could be used if Parliament delays ratification by requesting a legal opinion from the Court of Justice of the European Union.

In this context, also Commission officials intervened and tried to reassure the lawmakers that there is no intention to circumvent Parliament and that provisional application would not automatically follow the signature in Paraguay, especially given that the Mercosur countries would also require time to ratify the agreement.

In this particularly tense political and interinstitutional climate, attention is currently focused on the European Parliament, to see whether it will decide to refer the matter to the Court, and, if so, on the Council, to assess whether it will actually make use of the option of provisional application.

The position of the Member States and Industries

Positions among EU member states and economic actors remain sharply divided, largely along sectoral and national lines.

Export-oriented industries across manufacturing, chemicals, automotive components, and agri-food processing broadly support the agreement. For these sectors, the EU–Mercosur deal delivers tangible commercial gains by eliminating high tariffs on EU exports (duties that currently reach up to 35% on products such as car parts and alcoholic beverages) and by reducing non-tariff barriers in a fast-growing South American market. From this perspective, the agreement strengthens EU competitiveness and reinforces supply-chain diversification at a time of global economic fragmentation.

On the other hand, opposition remains strong among agricultural producers and several member states with politically influential farming sectors. France has emerged as the most vocal critic, joined by Italy, Ireland, Poland, Austria and Hungary, all of which have raised concerns about the impact of duty-free quotas granted to Argentina and Brazil for beef, poultry and other sensitive products, like rice and sugar. While Mercosur governments argue that these quotas are limited and commercially modest, many European farmers fear being undercut by imports produced with different rules on animal-welfare and environmental standards. These concerns are heightened by the perception that EU farmers face rising compliance costs linked to pesticide restrictions, animal welfare rules and climate policies.

Nonetheless, some experts pointed out that while European farmers failed to block the EU–Mercosur trade agreement, they ultimately emerged politically stronger. The deal moved forward only after Brussels introduced extensive safeguards and tighter import controls. For example, the EU can suspend tariff-free imports if market disruption occurs. The Commission has also pledged enhanced border controls and new rules to prevent the import of products treated with pesticides banned in the EU. It is also important to consider the large budgetary concessions made to the agriculture industry. In the EU's upcoming long-term budget, the Commission announced a €45 billion budget manoeuvre that would enable Member States to allocate greater funds to farmers. Yet, these assurances have not fully softened opposition from farming unions or from green and left-wing political groups, which continue to warn that the agreement risks accelerating deforestation, both in EU and South America, undermining indigenous rights, and weakening environmental protections.

What to expect

In the immediate term, attention will focus on three closely connected institutional milestones.

• First, the signature of the agreement in Paraguay.
• Second, the spotlight will shift to the European Parliament, whose consent is required to move forward the final approval. It also remains to be seen whether the European Parliament will seek a legal opinion from the Court of Justice, a move that could delay the agreement’s ratification by several months.
• Third, debate will intensify around the sequencing of implementation, particularly the possibility of provisional application of the trade provisions while waiting for full ratification of the broader Partnership Agreement. 

Taken together, these steps suggest that while EU–Mercosur has decisively moved beyond diplomatic stagnation, its future now lays less on negotiation and more on domestic politics and legal strategies.

 

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