Finance
EU fast-tracks contentious trade deal with South America's Mercosur
Published by Global Banking & Finance Review®
Posted on February 27, 2026
2 min readLast updated: February 27, 2026
Quick Summary
The European Commission will move to provisionally apply the EU–Mercosur trade deal—letting tariff cuts and key trade rules start before full European Parliament approval—to lock in a “first-mover” advantage after Argentina and Uruguay ratified. The pact is framed as a competitiveness and supply-cha
EU fast-tracks Mercosur deal with provisional application to cut tariffs
By Philip Blenkinsop
Provisional application to secure first-mover advantage
BRUSSELS, Feb 27 (Reuters) - 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.
Why the EU is moving ahead before full approval
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.
Deal scope and tariff impact
The deal with Argentina, Brazil, Paraguay and Uruguay, concluded in January after some 25 years of negotiations, could remove around 4 billion euros ($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.
Supporters vs opponents across the bloc
Germany and other supporters such as Spain say the deal is essential to offset business lost due to U.S. 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.
Ratification status and next steps
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."
($1 = 0.8473 euros)
(Reporting by Philip Blenkinsop, editing by Andrei Khalip)
Key Takeaways
- •Provisional application is an EU tool to start implementing the parts under EU competence before the full ratification process ends; von der Leyen stressed full conclusion still requires European Parliament consent, even as a CJEU opinion request could slow final approval. (en.mercopress.com)
- •Economic stakes are large: the Commission says EU firms could save over €4bn a year in customs duties as Mercosur tariffs fall (e.g., cars up to 35%, machinery 14–20%, pharma up to 14%), making this one of the EU’s most commercially significant tariff-cutting deals. (commission.europa.eu)
- •Politics remain combustible: the deal would create a massive EU–Mercosur free-trade zone (often described as ~700m people), but opposition—led by farm-focused member states—centers on increased beef/sugar/poultry competition and institutional concerns over bypassing immediate parliamentary approval. (apnews.com)
References
Frequently Asked Questions about EU fast-tracks contentious trade deal with South America's Mercosur
1What did Ursula von der Leyen say about the EU-Mercosur trade deal?
She said the European Commission will proceed with provisional application of the agreement to secure a first-mover advantage.
2Why is the EU moving to apply the agreement provisionally?
EU lawmakers voted to challenge the agreement in the bloc's top court, which could delay full implementation; provisional application allows parts such as tariff cuts to start sooner.
3Which countries are included in the Mercosur deal mentioned in the article?
The deal involves Argentina, Brazil, Paraguay and Uruguay.
4What is the estimated scale of tariff reductions from the agreement?
It could remove around 4 billion euros of duties on EU goods exports, making it the EU's biggest free trade agreement by potential tariff reductions.
5Why is the deal contentious within the EU?
Supporters including Germany and Spain say it helps offset business lost due to U.S. tariffs and reduces reliance on China for critical minerals, while opponents led by France say it will increase imports of cheap beef, sugar and poultry, undercutting domestic farmers.
