EU-Mercosur: New Obstacles and an Opening for Argentina

After more than 25 years of negotiations, the historic trade agreement between the European Union and Mercosur remains elusive. While leaders of both blocs recently met to sign the agreement, the final step—internal ratification—is proving more complex than expected in the EU. In the face of this uncertainty, Argentina is poised to approve the deal. Is there still a chance we might see the treaty come into effect in 2026?

The European Union and Mercosur (Argentina, Brazil, Uruguay, and Paraguay) have been engaged in negotiations for a free trade agreement between the two blocs since 1995. The deal would create one of the largest free trade areas in the world, with a combined population of more than 700 million people and representing roughly a quarter of the world’s GDP.  The agreement would lower tariffs on more than 90% of goods traded between the blocs and be phased in over a 10-to-15-year period. For more information, see our earlier article on the agreement here: Will Argentina Benefit from a Free Trade Agreement with the EU?

Negotiations concluded in late 2024, with the final deal splitting off the trade pillar into an interim agreement designed to go into effect first, as it would only require EU-level authorization. The remaining political dialogue, cooperation and trade commitments would come into force later, after securing the additional approvals necessary from each EU member state. Underlying the two-track strategy was the assumption by EU leaders that there was sufficient support for the trade deal at the EU-level. But they miscalculated.

Earlier this month, after receiving the green light from the Council of the EU, representatives from both blocs met to finally sign the full treaty in Paraguay (both the interim and final agreement). This kicked off the final stage of the process: internal ratification. However, in the EU, this did not go as planned. Just days after the signing ceremony, the European Parliament voted to send the treaty to the Court of Justice of the European Union (CJEU), initiating a legal review expected to take at least a year or more. Now, the European Parliament is essentially in a holding pattern. It will not take up the treaty again until the CJEU issues its decision.

Europe’s move to put the trade deal on ice pending legal review from the bloc’s high court makes it unlikely for the deal to come into effect in the short run—but not impossible. EU leaders have signaled an openness to use another potential lever at their disposal: provisional application of the deal during the legal review. The catch is that the European Commission has been reticent to make any firm commitments until the agreement is approved by at least one Mercosur country.

If you are assessing how the EU-Mercosur agreement could affect your operations in Argentina, or you’d like to discuss Argentina’s current trade environment more generally, please feel free to get in touch with the article’s authors Charles Umbach-Bascone (pasantes@wsclegal.com) and Tom Standifer (tstandifer@wsclegal.com).

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