The European Union has finalized a controversial trade deal with Latin American nations more than two decades in the making that will result in the largest global free trade zone on record.<\/p>\n
On Friday, European Commission President Ursula von der Leyen announced that the EU-Mercosur Partnership Agreement<\/a> (EMPA), which will facilitate trade and cooperation between the EU\u2019s 27 member nations and Argentina, Brazil<\/a>, Paraguay and Uruguay, was finalized by the European Council.<\/p>\n More from Sourcing Journal<\/strong><\/p>\n \u201cWith 2026 just underway, today Europe has sent a strong signal that we are serious about our priorities. On our commitment to Europe\u2019s competitiveness and creating growth and opportunities for businesses and citizens. On our commitment to diversify our trade and reduce our dependencies. And in the face of an increasingly hostile and transactional world, a clear commitment to strengthen our international partnerships,\u201d she wrote, no doubt referencing the punishing and widespread duties levied by the United States<\/a> on more than 100 of its trading partners.<\/p>\n \u201cWith the Mercosur agreement, we are creating a market of 700 million people\u2014the largest free trade zone in the world,\u201d she added.<\/p>\n According to von der Leyen, 60,000 European companies currently export to the Mercosur region\u2014half of them small- and medium-sized businesses that she said will benefit from the lowering of trade barriers like tariffs<\/a>. The deal is projected to save such European enterprises 4 billion euros (about $4.6 billion) annually in export duties and will create more streamlined, \u201csimpler\u201d customs procedures and greater access to raw materials.<\/p>\n Calling the deal a \u201cwin-win\u201d for both sides, the European Commission president said the EMPA would boost business opportunities and Europe\u2019s investment in strategic sectors in Latin America, while also creating a booming market for European exports, which are expected to grow by nearly 50 billion euros ($58.1 billion) by 2040. Mercosur exports, in turn, are slated to grow by up to 9 billion euros ($10.4 billion) during that time.<\/p>\n The provisions of the agreement were not just designed for economic cooperation, but to bolster collaboration on issues like sustainable development and climate action, human rights, digitalization and multilateral national security. The deal\u2019s Interim Trade Agreement (iTA), which will remain in place until the EMPA enters into force, will immediately offer tariff reductions and open market access for an array of goods and services, including agriculture, automotive, pharmaceuticals and chemicals.<\/p>\n Story Continues <\/p>\n In her statement, von der Leyen acknowledged the chorus of concerns emanating from Europe\u2019s agricultural sector. \u201cThis agreement contains robust safeguards to protect their livelihoods. We are also stepping up our actions in relation to import controls, because rules must be respected, also by importers,\u201d she said.<\/p>\n Farmers across countries like France, Poland, Austria and Ireland have bemoaned the changes that the deal could invite\u2014shifts they say could be a threat to their livelihoods. COPA-COGECA, a union comprised of two of Europe\u2019s largest agricultural organizations, has long resisted the formation of a trade agreement. For one, the deal could open the European consumer market to a deluge of cheaper options for products like beef and poultry, rice and sugar from Latin America, undercutting local producers, they believe.<\/p>\n Europe\u2019s regulatory environment and environmental standards could also pose a disproportionate burden for local farmers adherent to the laws, farmers have said. While they are subject to strict policies under the EU Green Deal, they argue that the EU-Mercosur deal doesn\u2019t do enough to force foreign entities to play by the same rules. The framework\u2019s protections when it comes to labor and ecology are lacking in enforcement mechanisms or sanctions, farmers and some European states have argued.<\/p>\n Euronews reported that Poland, Austria, Hungary and Ireland also voted against it, while Belgium abstained. Germany and Spain were proponents of the EMPA, while Italy<\/a>, which ultimately voted in favor, was regarded as a key decider in the matter.<\/p>\n Italian Prime Minister Giorgia Meloni said in a press conference Friday that she never had \u201cany ideological objections\u201d to the EMPA, though she underscored the need for enhanced protections for local industry. \u201cWe have always said we will be in favor of it when there are sufficient guarantees for our farmers,\u201d she said. \u201cThe agreement\u2019s potential is good, but not at the expense of the excellence of our products.\u201d<\/p>\n