After 25 years of negotiations, the EU and Mercosur signed a Free Trade Agreement (FTA) in Paraguay on 17 January 2026, covering more than 700 million people. Argentina and Paraguay have already completed their ratification processes. The agreement consists of an association agreement (including political and trade pillars) as well as an interim agreement covering only the trade pillar. The FTA envisages the elimination of tariffs on more than 91% of EU goods and the gradual reduction of Mercosur’s tariffs, reaching up to 35% in many sectors. The agreement is also expected to create new opportunities for investment in services and manufacturing sectors and facilitate companies’ participation in public procurement. Furthermore, it aims to expand trade in services, including financial services, telecommunications and transport.

Within the EU, the Mercosur Agreement has particularly triggered objections from the agricultural sector, as the strong position of countries such as Brazil and Argentina in agricultural production has raised concerns about competitiveness. IKV Chairperson Ayhan Zeytinoğlu made the following statement on the issue:

“Mercosur countries such as Brazil and Argentina have a highly competitive structure in products such as beef, poultry and soy. This competitiveness stems from factors such as lower labour costs for farmers in South America, the larger size of farms in the region and the strict health and environmental regulations applied in Europe. In response to this risk, the EU grants only limited access to its market for imports of agricultural and food products. In particular, access to the EU market for sensitive products such as beef, poultry and sugar will be implemented gradually and restricted through quotas.

In addition to quotas, on 5 March 2026 the Council of the EU approved a new regulation designed to provide safeguards against potential harm to EU farmers arising from the Mercosur FTA. Through this regulation, the EU aims to protect producers from sudden market shocks and import surges by ensuring the rapid implementation of protective measures. The regulation establishes a threshold for launching investigations concerning sensitive products. Accordingly, the EU will be able to initiate an investigation if import volumes exceed the average of the previous three years by 5%. Investigations will be completed within four months, and provisional measures will be introduced within 21 days. The Commission will monitor imports of sensitive products and publish regular reports on market developments.”