Mercosur: Learn the details of the agreement that will help “dodge Trump’s tariffs”

The process of adopting the European Union's trade agreement with Mercosur is accelerating. Brussels presented this Wednesday the proposals it will send to Member States for approval, aimed at making the European Union (EU) "stronger" while simultaneously "dodging Trump's tariffs." The goal is to increase the EU's annual exports to the economic bloc by 39%, resulting in an additional €49 billion in goods sold. Learn the key details of this agreement, which still awaits approval by the European Parliament.

The agreement, which aims to create "the world's largest free trade zone," with a market of more than 700 million consumers, aims to reduce tariffs on essential raw materials and derived products, as well as ensuring that European companies can compete for public contracts on equal terms with companies from Argentina, Brazil, Paraguay, and Uruguay.

One of the key points is to reduce “the often prohibitive customs charges for EU exports” to Mercosur, including “essential industrial products, such as automobiles (currently with rates of 35%), machinery (between 14% and 20%) and the pharmaceutical industry (up to 14%)”.

According to the EU executive, the partnership agreement defends the interests of European farmers and food producers , facilitating the exploitation of new opportunities in Mercosur. However, Brussels guarantees that it does not alter safety standards and that "any product entering the EU market must comply with the EU's strict food safety standards."

The European Commission has promised to protect farmers from disruptions caused by the Mercosur agreement by introducing "strong safeguards." "We listened to you, this agreement is a new Mercosur agreement, we listened to everyone who wanted this agreement , from our partners in Mercosur to our Member States, and representatives of the agricultural sector, to make sure the agreement is good and fair," said European Commissioner for Trade Maroš Šefčovič at a press conference in Brussels.

Safeguards are precisely one of the most important aspects, as they protect producers in specific markets or Member States in the event of a damaging increase in imports from the four countries. This tool allows Brussels to monitor the situation—for a period of approximately six months—and, if warranted, apply unilateral tariffs to control potential market disruptions.

After 25 years of negotiations, the EU and Mercosur countries concluded the trade agreement in December last year , with the sending of the terms of the EU-Mercosur partnership agreement, with which Brussels also expects cheaper imports from the four South American countries, being another important stage in the process.

EU agri-food exports to Mercosur are expected to grow by almost 50% , as the agreement will reduce high tariffs on key EU agri-food products, specifically wine and spirits (up to 35%), chocolate (20%) and olive oil (10%).

The agreement will end "unfair competition" from Mercosur products that imitate original European goods , protecting 344 EU geographical indications. "This is the largest number of geographical indications protected in an EU agreement, making food safety procedures clearer, more predictable, and less complex for EU exporters," explains the European Commission.

Furthermore, this agreement will allow EU companies to compete for public contracts on equal terms with Mercosur companies and have exclusive preferential access to some raw materials and essential products . The agreement will help combat antimicrobial resistance, promote animal welfare standards, and strengthen the flow of information to keep dangerous products out of the market.

Overall, this EU-Mercosur partnership will increase the competitiveness of EU companies by eliminating tariffs on a wide range of products, reducing non-tariff barriers, and simplifying customs procedures by making it easier and cheaper for EU companies to export to Mercosur countries.

For the EU executive, this will allow EU companies to compete more effectively with other global players , increase their market share in Mercosur countries, and benefit from new business opportunities.

Brussels also announced the expansion and updating of the existing agreement with Mexico, which currently represents over €70 billion in annual European exports and around 630,000 jobs. According to information provided by the EU executive, the "modernized agreement" with Mexico, in place since 2000, will " eliminate the remaining restrictive customs duties on agri-food exports" to the country, which is "one of the oldest partners and the second-largest trading partner in Latin America."

This agreement includes cheese, chicken and pork, pasta, apples, jams, chocolate, and wine. The agreement also aims to "protect 568 traditional, high-quality European food and beverage products from imitation."

" Removing these tariffs, which currently amount to up to 100% on certain EU exports, will make EU products much more competitive in Mexico ," the European Commission added, revealing that it will also make it "faster and cheaper" for agri-food exporters from the European political-economic bloc to sell in Mexico.

European Council President António Costa argued on Wednesday that the agreements with Mercosur and Mexico make the European Union (EU) "stronger" and that there are benefits for both sides.

"I welcome the European Commission's presentation of the texts of the Partnership Agreement between the EU and Mercosur and the updated Global Agreement with Mexico," António Costa wrote on social media, adding that "it is now up to the Member States to make decisions."

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The President of the European Commission has also expressed her satisfaction with this agreement. " The agreements with Mercosur and Mexico are important milestones for the EU's economic future. We continue to diversify our trade, foster new partnerships, and create new business opportunities," said Ursula von der Leyen, quoted in a statement.

" EU businesses and the agri-food sector will immediately reap the benefits of lower tariffs and costs , contributing to economic growth and job creation," highlights the leader of the European Commission.

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The document will now go to European capitals for approval, with Brussels hoping to complete the process by the end of the year. If approved by the member states of both blocs, it will consolidate the largest free trade zone on a global scale, despite the certain rejection of countries like France, Ireland, and Poland, which in itself does not prevent it from coming into force. For the French, the largest beef producer in the European Union, the agreement is "unacceptable," according to Reuters.

However, the agreement has recently gained visibility and some urgency, at a time when 15% US tariffs on the European Union are already in effect. In July, Portuguese companies were already calling for expedited negotiations on the agreement with Mercosur , to open new markets and explore alternatives to mitigate the impact of US tariffs.