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EU-Mercosur: Key Developments Shaping the Trade Agreement

By  |  March 6, 2026

By: Reed Smith LLP

In this article, the Reed Smith team explore the implications of the newly signed EU-Mercosur Partnership Agreement and its accompanying Interim Trade Agreement, concluded in January 2026 after more than 25 years of negotiations between the European Union and the Mercosur countries of Argentina, Brazil, Paraguay, and Uruguay. The agreement covers a combined market of more than 700 million consumers and is expected to eliminate tariffs on over 90% of traded goods once the interim trade provisions enter into force, although significant political and procedural hurdles remain.

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    The structure of the agreement introduces a two-track ratification process. The broader partnership agreement, which includes political cooperation, requires approval by all EU member states, while the interim trade agreement can be ratified at the EU level alone to allow trade provisions to take effect earlier. To benefit from preferential tariffs, companies must demonstrate that their products meet the agreement’s rules of origin and provide “statements on origin” through a self-certification system supported by documentary evidence.

    Despite its economic significance, the agreement has faced strong opposition within the EU from agricultural groups and environmental advocates. Critics argue that increased imports from Mercosur could expose EU farmers to unfair competition and potentially weaken environmental and sustainability standards. In response to these concerns, the European Parliament has asked the Court of Justice of the European Union to assess whether the agreement complies with EU treaties, a process that could take up to two years and complicate the ratification timeline.

    At the same time, EU lawmakers have adopted stronger safeguard mechanisms designed to protect sensitive agricultural sectors by allowing the temporary suspension of tariff preferences if imports surge and threaten domestic producers. The Reed Smith team advises businesses trading between the two regions to use the interim period to prepare by reviewing supply chains, confirming compliance with origin rules, evaluating tariff classifications, and monitoring regulatory developments that could affect market access and trade operations once the agreement takes effect.

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