EU–Mercosur Trade Deal Closer Than Ever To Ratification

Hi! Today is September 17th, and here is your EU news summary for the week. Feel free to share this newsletter with friends and colleagues, and follow us on Twitter and LinkedIn.

Mathieu Solal is a European journalist and the co-founder of BLOCS, a weekly newsletter in French on international trade.

The head of France’s powerful farmers union FNSEA, Arnaud Rousseau, on Sunday called for “a major day of action” on September 26, in an interview with a French newspaper.

In the FNSEA’s crosshairs: “Mercosur, Donald Trump’s tariffs, and the flood of international imports that fail to meet our standards,” Rousseau declared.

The looming mobilisation looks like a last-ditch attempt to derail the trade accord between the EU and Mercosur (Argentina, Brazil, Paraguay and Uruguay). The pact would create the world’s largest free-trade area, covering more than 700 million consumers.

Path to ratification

Institutionally, however, ratification seems closer than ever.

On Wednesday, the European Commission submitted the trade chapter of the agreement to the Council. Approval requires a qualified majority — at least 15 member states representing 65% of the EU’s population — and should pass without difficulty.

France and Italy, both sceptical of the deal as recently as this summer despite negotiations dating back to the late 1990s, now appear resigned to supporting it.

What changed was the Commission’s pledge, made over the summer, to introduce legislation tightening monitoring of imports. This initiative — separate from the treaty text — would trigger an automatic probe if imports of a given product rise by more than 10%, or if import prices fall by 10% or more compared with European levels.

This promise seems to have sufficed to bring Paris and Rome on board, though both capitals are pressing for the legislative proposal to materialise quickly.

Mercosur governments, who might justifiably bridle at such unilateral European tinkering with the agreement’s implementation, are for now keeping quiet. The measure would come on top of protections already granted to European farmers in the free-trade treaty.

Import quotas

The deal allows up to 180,000 tonnes of poultry from Mercosur countries to enter the EU tariff-free each year — just 1.4% of EU output — along with 16 million tonnes of sugar (1.2% of EU consumption).

For beef, 99,000 tonnes would be admitted annually at a tariff of 7.5%, equal to 1.5% of European production. Beyond these quotas, punitive tariffs would apply to South American farm goods — an attempt to shield Europe’s most vulnerable agricultural sectors.

Around the Council table, only Poland still finds these safeguards inadequate, arguing they ignore farmers’ sensitivity. That stance falls well short of forming a blocking minority.

Provisional implementation

The European Parliament is also expected to endorse the deal, barring any unforeseen circumstances, paving the way for provisional application of its trade chapter.

The Commission has split the agreement in two, advancing the commercial aspects first. Those require ratification only by the Council and Parliament. The other, more political provisions — less contentious — will be left to the 27 national legislatures.

Provided ratification also proceeds in Mercosur states, the trade deal could begin taking effect before the end of 2026.

By 2040, tariffs on the vast majority of goods traded between the blocs would be scrapped — 91% of EU exports, according to Commission forecasts. Brussels expects European exports to South America to jump by nearly 40%. With the US market closing off, it argues, Mercosur offers a valuable outlet.

Opposition remains

That prospect is unwelcome to the FNSEA, which spearheaded farmer protests in 2024 that pushed the French government to toughen its stance. For now, however, other French unions have not joined the call to mobilise, and the movement lacks the European scope seen last year.

In early September, nine farm organisations — including Copa-Cogeca, the EU’s main agricultural lobby — restated their opposition, insisting the Commission’s assurances fall short.

Meanwhile, some 20 MEPs from across the political spectrum, including Renew’s Pascal Canfin, are pushing Parliament to adopt a resolution seeking to challenge, before the EU Court of Justice, the legality of the rebalancing mechanism agreed with Mercosur earlier this year.

SOTEU • On September 10th, Ursula von der Leyen delivered her annual State of the Union address to the European Parliament. She announced a partial suspension of bilateral support for Israel and will put forward a proposal for a partial freeze of the EU-Israel association agreement, while preparing sanctions against Israeli officials.

On defence, the Commission president called for the creation of a European Defence Semester to coordinate military spending. A 19th package of sanctions against Russia is in the works. Regarding Ukraine, she plans a “drone alliance” and €6bn in EU loans to bolster military innovation, including a “drone wall” and tighter monitoring of the eastern flank.

On competitiveness, the drive to cut red tape continues. A roadmap to strengthen the single market by 2028 is expected, with the Commission warning that significant internal barriers still hamper trade between Member states.

DATA ACT • On September 12th, the EU’s Data Act came into application. Adopted in late 2023, the regulation aims to reshape the ecosystem of data generated by connected devices — including cars, smart appliances or industrial tools grouped under the Internet of Things (IoT).

Among its innovations, the law grants users the right to access data produced by their devices, to share or reuse it. It also makes switching between cloud providers easier, while banning abusive contractual clauses that restrict data use. In addition, public authorities may request access to certain private data in the general interest, notably in situations of emergency.

Its entry into application marks an important milestone, though implementation remains complex. Some member states have yet to designate supervisory bodies, while companies fear the technical and financial burden of compliance.

DRAGHI • On September 16th, a high-level conference in Brussels marked the first anniversary of Mario Draghi’s report on European competitiveness.

The event reviewed progress on the report’s 170 recommendations, which in 2024 had diagnosed the EU’s shortfall in innovation, growing strategic dependencies and massive investment needs.

Draghi stressed the gravity of the situation: Europe is falling further behind its main global competitors, with a weakening growth model, rising vulnerabilities and insufficient financing.

Despite the Commission’s commitments and initiatives — in AI, decarbonisation and defence investment — he lamented Europe’s sluggish collective response and lack of urgency. He pointed to fragmented efforts and delays, especially in breakthrough technologies and energy, compared with the faster strides made by America and China.

He urged greater boldness, deeper coordination at the EU level, and stronger collective choices on investment, industrial policy and internal market reform.

• For the CER, Hannes Berggren outlines her recommendations for the EU’s upcoming digital regulatory package.
• Bruegel’s Marie-Sophie Lappe and David Pinkus argue that the EU should focus on making capital market investments more attractive to retail investors. Fredrik Andersson of the CEPS points to the successful Swedish model of popular investment as a useful guide.