Trade between the EU and Mercosur faces significant tariff barriers, making many goods costly to export or import. The Agreement eliminates tariffs on around 91% of goods traded between the blocs. This would, for example, reduce the trade-weighted effective tariff rate on EU exports to Argentina from 10.3% in 2024 to approximately 1% over time. Current tariffs can be as high as 35% for auto parts and cars or 28% on dairy products. The removal of these tariffs will save approximately $4 billion and will take effect gradually, with a timeline dependent on the specific product. Mercosur tariffs for car parts, for example, will be eliminated linearly over a course of ten years after signing, whilst the EU will create an additional tariff rate quota for beef over the next five years.
The agreement consists of two separate legal instruments. Firstly, the interim Trade Agreement (iTA) focused exclusively on trade matters. The iTA will enter into force once approved by the European Parliament and concluded by the Council by qualified majority.
Secondly, the EU-Mercosur Partnership Agreement (EMPA) with a much broader scope. It covers political dialogue, cooperation, investment, and environmental provisions in addition to trade. Full implementation requires ratification by all 27 EU member states, following national procedures – a process that can take years. Once EMPA enters into force, it will replace the iTA.
To mitigate delays, the European Commission proposed the provisional application of certain EMPA provisions, especially the political and cooperation measures. Past experience shows that the ratification process can be quite slow. For example, the EU-Canada Agreement (CETA) has been provisionally applied since 2017, yet only 17 of 27 member states have ratified it. Delays in CETA’s ratification largely stem from comprehensive investment provisions, which are less pronounced in the EMPA. However, further discussions on EMPA could arise due to ambitious sustainability commitments.