The EU-Mercosur partnership agreement in a nutshell
Mercosur is a South American trade bloc established in 1991 to facilitate free trade and economic expansion among it’s members. It acts as a custom bloc with a common external tariff (CET) for trading with non-member countries.
Key data:
Full members: Argentina, Brazil, Paraguay, Uruguay and Bolivia.
Suspended member: Venezuela, due to incompliance regarding democratic and trade standards.
Associated countries: Chile, Colombia, Ecuador, Guyana, Peru and Suriname. These countries receive tariff reductions but have limited voting rights.
Economic importance: the combined GDP in 2025 of the 5 members results in a significant US$ 3trillion to US$ 4.3trillion; representing roughly 70-80% of South America’s GDP and covering a market of 300 million people.
EU – Mercosur Deal: in September 2025 the Mercosur bloc signed a historic Free Trade Agreement (FTA) with the European Free Trade Association (EFTA) with the goal of gradually reducing tariffs on 91% of exports over a period of 15 years and overall simplifying the burdensome of processes. There’s however an important caveat to be mentioned as some reduced tariffs (mainly for sensitive farm products) may be accompanied by quotas or other safeguards regulation, putting ‘free trade’ in a more nuanced light.
Current status: the ratification of the tariff reductions has not been finalized yet as there’s strong legal opposition (led by France, Austria and Ireland) concerning whether this agreement is in line with the European treaties. However, it’s likely that the European Commission will implement provisionally parts of the deal – the EU Mercosur Interim Trade Agreement (iTA) – which will act as a standalone EU agreement and does not require the ratification by the individual EU members.
Sectors that will foremost benefit from the abolishment of tariffs: Agri-food products (CET 20-35%), Machinery (CET 14-20%), Pharmaceuticals (CET 14%), Cars (CET 35%), Textiles and clothing (CET 35%). In addition, many service providers should as well benefit from the agreement, like Business and financial services, telecommunications and public tendering.
We are closely tracking the development of above Agreement; more information to be followed.
