EU-Mercosur trade deal: challenges of ratification?

On 28th June 2020, the European Union finalized an agreement with the Mercosur states of Argentina, Brazil, Paraguay and Uruguay. Once ratified, the trade agreement will create one of the largest free-trade zones in the world and is intended to increase trade and investment between the two regions by lowering tariff and non-tariff trade barriers. The deal is also intended to standardize rules for trade and investment, specifically around food safety standards, competition and intellectual property rights.

While the deal was initially met with optimism on both sides of the Atlantic, significant questions and challenges have arisen in the past months. Several EU member states do not support the agreement and specific sectors on both sides have raised concerns about the potential impact of the deal on the competitiveness of their products. Some states and civil society actors have also raised concerns regarding the environmental impact of the deal, particularly if importing new products under the agreement would undermine calls to prevent deforestation in Brazil.

What is the current status of the EU-Mercosur agreement and is ratification a likely possibility in 2021? How will EU and civil society concerns be rectified and how likely are Mercosur states to make concessions to the deal in its current form?

This discussion is intended to feed into ongoing Chatham House research on expanding trade and investment in Latin America.

We would like to thank CAF - Development Bank of Latin America for their generous support of this project.

More information regarding Chatham House’s research on global trade can be found through the Global Trade Policy Forum. The Global Trade Policy Forum is supported by founding partner AIG and supporting partners Clifford Chance LLP, Diageo plc, EY, and UPS.