Analysis of the impact of the EU-Mercosur agreement from 3 perspectives: geopolitics, detractors and proponents.
The present article explores several dimensions of the impact of the EU-Mercosur trade agreement, evaluating its impact on European strategic autonomy and industrial competitiveness through the analysis of the following core issues:
- Geopolitical Analysis of the impact of the EU-Mercosur and Economic Realignment
- Agrarian opposition: Analysis of the impact of the EU-Mercosur and regulatory asymmetry
- Industrial supporters: Analysis of the impact of the EU-Mercosur and market liberalization
1. Geopolitical Analysis of the impact of the EU-Mercosur and Economic Realignment
The global economic landscape is currently defined by the growing rivalry between the United States and China.The EU-Mercosur agreement establishes a free trade zone encompassing more than 720 million consumers. The EU-Mercosur agreement repositions Europe as a relevant global actor at a time of intense geopolitical competition not only between these two powers but also against Russia.
China has dominated trade for decades. Consequently, Europe gains a degree of independence it would not otherwise possess. China has also been growing fast and not only represents a great EU competitor, also to Europe. As China expands, it is becoming an important trading partner for Brazil and Argentina, threatening European dependence on essential raw materials such as lithium or graphite.
The United States has historically been a leader in the Western Hemisphere, but its presence in the Latin American market has remained irregular. Moreover, Trump’s administration is applying protectionist trade measures against most countries, including the EU, which is experiencing a loss of competitiveness in the American market due to tariffs upon European exports. In this sense, opening borders with Latin America benefits numerous sectors, such as the automotive, chemical and pharmaceutical, and machinery industries, among others industrial sectors. Therefore, this deal represents a necessary counterbalance to ensure that European industries maintain access to essential raw materials without compromising their strategic position.
Besides China and the US, it is important to look into Russia-EU conflicts and how they affect Western supremacy. Recent conflicts, such as the war in Ukraine and the interest in acquiring Greenland by the Trump Administration, have a geopolitical background linked to the control of strategic natural resources. This includes energy resources such as gas, of which Russia is the world’s second-largest exporter. Russia is also the world’s leading exporter of fertilizers, with Brazil among other countries including members of the Union. Some of these products face strict restrictions on the oldest Continent due to their environmental impact. In economic terms, Ursula von der Leyen, the European commission president, has claimed that tariffs will be imposed on the exporter countries if European standards are not met. Last, but not least, this agreement allows us not only to gain economic influence but also to promote global sustainability and strategic independence.
2. Agrarian opposition: Analysis of the impact of the EU-Mercosur and regulatory asymmetry
Agrarian sectors across Europe have shown significant opposition, characterizing the treaty as a catalyst for unfair competition. The fundamental grievance stems from regulatory asymmetry: while European producers adhere to the world’s most stringent environmental and animal welfare standards, Mercosur counterparts often utilize pesticides and antibiotics banned within the Union.
Protests across Europe are perceived as a response to an existential threat, particularly taking as a reference how French and Spanish producers have been displaced in European markets by the introduction of vegetables and fish products from Morocco. This precedent has generated a collective skepticism among farmers regarding the future of the agricultural sector, which is threatened not only by a lack of generational renewal but also by the difficulty of remaining competitive while facing unfair competition.
Agricultural producers complain against social and environmental dumping, as local producers must comply with a stricter regulatory framework, while importers can operate with less bureaucracy and without the plant-health measures or veterinary drugs banned in the EU.
Detractors also emerge from an environmental perspective, citing the carbon footprint generated by long-distance imports and the perceived risk of deforestation, which jeopardizes the Paris Agreement. In theory, compliance with the EU Deforestation Regulation (EUDR) is non-negotiable. Time will tell whether these good practices are implemented correctly or simply become another bureaucratic formality.
3. Industrial supporters: Analysis of the impact of the EU-Mercosur and market liberalization
Large European companies—industrial, automotive, pharmaceutical, service, and machinery—strongly support the EU-Mercosur agreement, as they stand to be its primary beneficiaries.
Key advantages:
- Elimination of tariffs in South American markets and cost savings. According to the European Commission, the automotive, machinery, chemical, and pharmaceutical industries are expected to save more than €4 billion annually in tariffs, facilitating competition with their US counterparts.
- Access to certain agricultural products, such as luxury French wine, or products with protected designations of origin, such as Manchego cheese.
- The opening of public procurement markets represents a significant opportunity for European firms to compete for government contracts under the same conditions as domestic companies.
- Increased business opportunities for companies in the telecommunications (Telefónica), transportation and infrastructure (Ferrovial), financial services (Santander), and construction sectors—in other words, companies listed on the IBEX 35.
Consequently, in general terms, large corporations see the agreement as an opportunity to increase their exports to a market of 300 million consumers. Furthermore, it improves their global competitiveness in an environment protected from powers like China and the US.