EU fast-tracks contentious trade deal with South America’s Mercosur

The European Union will provisionally apply a contentious free trade agreement with South American bloc Mercosur to ensure it secures first-mover advantage, European Commission President Ursula von der Leyen said on Friday.

The European Union normally waits for approval of its free trade agreements by EU governments and the European Parliament. However, EU lawmakers voted last month to challenge the agreement in the bloc’s top court, potentially delaying its full implementation by two years.

Approval by the EU assembly will still ultimately be required for the trade pact, but the EU and Mercosur can begin reducing tariffs and applying other trade aspects of the agreement before then.

The deal with Argentina, Brazil, Paraguay and Uruguay, concluded in January after some 25 years of negotiations, could remove around €4 billion ($4.7 billion) of duties on EU goods exports, making it the bloc’s biggest ever free trade agreement in terms of potential tariff reductions.

Germany and other supporters such as Spain say the deal is essential to offset business lost due to US tariffs and to reduce reliance on China for critical minerals. Opponents led by France – the EU’s largest agricultural producer – say the deal will sharply increase imports of cheap beef, sugar and poultry, undercutting domestic farmers who have staged repeated protests.

The Commission’s move follows Argentina and Uruguay ratifying the agreement on Thursday, with Brazil and Paraguay expected to follow soon. Von der Leyen said the deal offers Europe first-mover advantage, but this advantage had to materialise.

“I’ve said before, when they are ready, we are ready,” von der Leyen said in a short statement. “On that basis, the Commission will now proceed with provisional application.”