Who wins and who loses with the Mercosur agreement?

The 27 EU member states gave the green light this Friday to the signing of the free trade agreement between the European Union and Mercosur (the trade bloc formed by Brazil, Argentina, Uruguay, and Paraguay), in a qualified majority decision that will be formalized in the coming hours. The member states gave their approval at a meeting of ambassadors in Brussels, despite the opposition of France and Hungary. The decision came after the safeguards agreed upon in December to protect the European agri-food sector were formally approved at the same session. Once the written procedure concludes at 5:00 PM this Friday, the mandate will be made official, allowing the President of the European Commission, Ursula von der Leyen, accompanied by the President of the European Council, António Costa, to sign the association agreement and the free trade agreement with the Mercosur partners. The signing of the agreements will allow the immediate and provisional entry into force of the trade provisions, until the ratification process by both regions is fully completed, including approval by the European Parliament (which can approve or reject it, but not modify it) and the national parliaments. Sources from the Cypriot Presidency of the Council of the EU, which is coordinating the agreement this semester, indicate that the debate among ambassadors has confirmed the existence of a "broad majority" of countries in favor of signing the agreements and the provisional application of the trade provisions. Other sources consulted by Europa Press indicate that France, Hungary, Ireland, Poland, and Austria voted against, and Belgium abstained. However, these countries do not have the necessary support to prevent the adoption of the agreement by qualified majority. That is, the support of at least fifteen member states representing at least 65% of the population is required.

The signing of the agreement will come more than a year after the end of negotiations between the European Commission—which speaks on behalf of the 27 member states in trade policy—and the Mercosur countries was announced in December 2024. There was already a first attempt to sign it last December, when French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni blocked the signing to demand more support measures for farmers.

Italy's change of position

It was precisely Italy's change of position, supporting the signing this Friday, that allowed the agreement, negotiated by the parties for two decades, to move forward. Therefore, the ambassadors first had to formally approve the safeguards that strengthen the protection of European agriculture against potentially serious distortions caused by the opening of the Mercosur market, especially in sectors such as poultry, beef, eggs, citrus fruits, and sugar. This framework establishes specific thresholds for the European Commission to initiate investigations—and subsequently activate specific measures—in the event of a significant impact on sensitive European agricultural products. In December, the Council and Parliament agreed to set these thresholds at 8%, but they were ultimately reduced to 5%—as advocated by the outgoing European Parliament—to satisfy Italy's demands.

In this way, Brussels will act when imports of sensitive products increase by an average of 5% and prices fall by the same percentage over a three-year period (compared to the 10% initially proposed by the Commission). The agreement on safeguards still needs formal adoption by the plenary of the European Parliament and the Council to enter into force.

Winners and losers

The EU-Mercosur agreement does not benefit or harm the different agri-food sectors equally. Livestock farming stands out among the sectors most threatened, while there are advantages for olive oil and Spanish wines. The Spanish government, meanwhile, insists on the importance of a free trade area between the two blocs, especially in the current geopolitical environment. Farmers and ranchers in Spain—and in other parts of Europe, such as France and Poland—reject the agreement, while the processing industry—represented by the trade association FIAB—holds a favorable position. "There are sectors with opportunities, such as those in the Mediterranean, but we haven't achieved the best conditions for immediate access to Mercosur; defensive and offensive interests are not aligned, and the agreement could create imbalances," Gabriel Trenzado, Director General of Agri-food Cooperatives, told EFE. The agreement includes concessions to Mercosur in beef, poultry, ethanol, and rice, albeit with deadlines and a gradual implementation. For example, in meat shipments, it limits preferences to a fraction of EU production: 1.5% for beef and 1.3% for poultry. Regarding Spanish exports, it benefits wine, beverages, olive oil, chocolate, and dairy products. However, the sector anticipates that the timeframe for taking advantage of these benefits could extend to ten years. In the fishing sector, liberalization could benefit the supply of raw materials for the Spanish industry, and among the potential concessions are very long deadlines, such as a tariff reduction in sixteen stages for Spanish sales of cuttlefish and squid.

The safeguards put in place to reassure European farmers are based on increased monitoring and a rapid response to increased imports or falling prices; they affect sensitive products such as beef, poultry, rice, honey, eggs, garlic, ethanol and sugar; and would mean the return of tariffs if there are serious problems with EU producers. Spain exports agri-food goods to Mercosur worth 463 million euros, while imports amount to 4.118 billion euros annually, according to 2024 data from the Ministry of Agriculture, Fisheries and Food. The most exported Spanish products to Mercosur are olive oil (3 million euros) and olive pits (31.8 million euros); while the most imported are soybeans (1.880 billion euros), coffee (381 million euros), and crustaceans (31 million euros). The agreement, according to the Spanish government, dismantles tariffs imposed on Spanish sales of olive oil, wine and spirits, pork, fruits and vegetables, spices, and processed agricultural products (confectionery, thickeners, and sauces). Regarding imports, sources at the Ministry of Agriculture indicate that even livestock farming will benefit from the concessions. Mercosur would benefit because it would provide greater security of supply for essential commodities like soybeans, thus favoring the animal feed industry. This opinion is not shared by the sector, which warned of the threat posed by opening up the market to livestock products from global agricultural leaders like Brazil and Argentina, at a very delicate time for the industry. Within the fruit and vegetable sector, there are opportunities for Spain, but also threats from opening up the market to citrus fruits, especially juices from Mercosur.