EU reaches South America trade deal after 25 years of talks
The EU has reached a free trade agreement with Brazil, Argentina, Paraguay and Uruguay, 25 years after talks began and despite opposition from farmers in many European countries.
The deal with the Mercosur trading bloc is expected to require approval from the European parliament within the next few months
Brazilian President Luiz Inacio Lula da Silva hailed it as “a historic day for multilateralism” after four South American countries put the finishing touches to the agreement in Brussels.
This comes against the backdrop of US President Donald Trump’s imposition of tariffs on countries around the world and his recent military intervention in Venezuela.
The EU heralded its biggest-ever free trade deal as a “win-win”, but critics argued cheap imports could hurt European farmers in products such as beef, poultry and sugar.
President Lula wrote in
EU Commission President Ursula von der Leyen said the deal “will deliver meaningful benefits to consumers and businesses on both sides.”
Farmers in many European countries staged last-ditch protests against the agreement; Marches and demonstrations using tractors were held in France and Belgium.
“There is a lot of pain,” Judy Peeters, a representative of a young Belgian farmers’ group, told AFP at a protest on a highway south of Brussels. “There’s a lot of anger.”
Von der Leyen said the Commission had listened to farmers’ concerns and acted on them by introducing “robust safeguards” in the agreement to protect farmers’ livelihoods.
As well as strengthening trade and political ties, the European Commission said the deal would help combat climate change through commitments to halt deforestation and ensure a “reliable” flow of raw materials critical for the global green transition.
The commission expects the deal will save local companies €4bn ($4.7bn, £3.5bn) a year in export duties.
South American countries have deposits of gold, copper and some critical minerals needed for renewable energy and battery technology.
Former European trade commissioner Cecilia Malmström, who led EU trade negotiations for five years, told World Business Express on the BBC World Service that parts of the trade agreement could be suspended if Mercosur countries did not stick to their commitments on environmental protection.
“[This agreement] “It is also a very strong geopolitical signal today to other powers that do not appreciate rules-based trade as much as we do,” he said.
On Friday afternoon, a majority of EU member states confirmed their support for the free trade agreement, but it will still require approval from the European Parliament for it to come into force.
Jack Allen-Reynolds, deputy head of Eurozone economist at Capital Economics, said the vote was expected to take place in parliament soon.
But he said the real question was how much impact the deal would have, noting the Commission’s own estimate that the deal would increase the EU’s economic output by just 0.05%.
“But the more important point is that even if the agreement is eventually implemented, it will be insignificant from a macroeconomic perspective,” he said.
“And because it will be phased in over 15 years, these benefits will not be realized until 2040 at the earliest.”
