Montevideo: A trade agreement a quarter-century in the making has reached an unusual stage: partially in force, commercially active, and simultaneously on its way to the European Court of Justice.
The European Union and the Mercosur bloc — Argentina, Brazil, Paraguay and Uruguay — signed both a Partnership Agreement and an Interim Trade Agreement on 17 January 2026, more than 25 years after talks first opened in 1999 and six years after a political agreement reached in 2019 then stalled for half a decade over environmental and agricultural objections, particularly from France.
The interim agreement has applied provisionally since 1 May 2026, meaning tariff reductions on a range of industrial goods, machinery and chemicals are already taking effect for EU exporters, while Mercosur producers are gaining incremental access to European markets for agricultural products including beef, poultry, sugar and ethanol — the categories that have generated the fiercest opposition from European farming lobbies.
The two-track legal structure reflects an attempt to navigate exactly that opposition. The interim trade agreement falls within the EU’s exclusive trade competence, meaning it can take effect once the European Parliament gives its consent, bypassing the lengthy and uncertain process of ratification by all 27 national parliaments, and in some member states regional assemblies, that has stalled previous EU trade deals for years at a time. The broader partnership agreement, covering political dialogue and cooperation alongside trade, requires unanimous member-state ratification and will take considerably longer to enter into force, if it does at all.
That sequencing has not satisfied critics. In a vote earlier this year, the European Parliament agreed by 334 votes to 324, a margin of just ten, with 11 abstentions, to refer the agreement to the European Court of Justice for a ruling on whether splitting the deal into two instruments, and applying the trade portion provisionally ahead of full ratification, is compatible with the EU treaties. Parliament cannot hold its consent vote on the interim agreement until the Court rules, a process officials acknowledge could take the better part of a year.
The substantive objections are familiar from a decade of debate. French, Polish and Irish farm groups argue that Mercosur beef and poultry, produced to lower environmental and animal-welfare standards and at lower cost, will undercut European producers already squeezed by the bloc’s own climate and biodiversity rules — rules Mercosur goods are not required to meet. The Commission has built in safeguard clauses allowing tariffs to be reimposed if import surges materialise, and a dedicated fund to compensate affected farmers, but both have so far done little to quiet the opposition.
For Mercosur’s members, the agreement remains a rare opportunity to diversify export markets away from China, their dominant trading partner, at a moment when global trade is increasingly organised around competing blocs. Whether that opportunity survives a referral to Europe’s highest court, and the parliamentary vote that follows it, will determine whether 2026 is remembered as the year the EU-Mercosur deal finally arrived, or merely the year it cleared its last procedural hurdle before the next one.
