Finance
EU lawmakers deal blow to Mercosur trade deal by referring it to top court
Published by Global Banking & Finance Review®
Posted on January 21, 2026
3 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 21, 2026
3 min readLast updated: January 21, 2026
EU lawmakers will vote on a legal challenge to the Mercosur trade deal, which could delay its implementation by two years.
By Philip Blenkinsop
BRUSSELS, Jan 21 (Reuters) - EU lawmakers voted on Wednesday to challenge the European Union's contentious free trade agreement with South America in the bloc's top court, a move that could delay the deal by two years and potentially derail it.
The European Union signed its largest-ever trade pact with Mercosur members Argentina, Brazil, Paraguay and Uruguay on Saturday after 25 years of negotiations. It still requires approval before it can take effect.
German Chancellor Friedrich Merz, among the deal's principal backers, called the referral to the court regrettable, adding in a social media post that the EU assembly had "misjudged the geopolitical situation". He insisted that the agreement should be applied soon on a provisional basis.
Germany and other supporters such as Spain point to U.S. President Donald Trump's disruption of global trade. They argue the deal is essential to offset business lost to U.S. tariffs and to reduce reliance on China by securing access to critical minerals. They also warn that Mercosur governments are losing patience with the EU after years of negotiations.
FRANCE SAYS VOTE MUST BE RESPECTED
The EU could still apply the pact provisionally pending the ruling and parliamentary approval. But doing so could prove politically difficult given the likely backlash, and the European Parliament would retain the power to annul it later.
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.
A group of 144 lawmakers put forward a parliamentary motion to ask the EU Court of Justice to rule on whether the agreement can be applied before full ratification by all member states and whether its provisions restrict the EU's ability to set environmental and consumer health policies. The court typically takes around two years to deliver such opinions.
The European Parliament backed the motion with 334 votes in favour to 324 against, with 11 abstentions.
France's largest farm union FNSEA called the vote a victory. French Prime Minister Sebastien Lecornu said in a social media post that it was "an important vote that needs to be respected".
The European Commission, which negotiated the deal, said the questions raised in the motion had already been addressed extensively with EU lawmakers and they had all been dealt with in previous trade agreements. It said it would engage with EU governments and lawmakers before deciding what to do next.
(Reporting by Philip Blenkinsop; additional reporting by Louise Rasmussen, Alessandro Parodi, Sybille de La Hamaide; Editing by Mark Potter and Chizu Nomiyama)
The EU Court of Justice is the highest court in the European Union, responsible for interpreting EU law and ensuring it is applied uniformly across member states.
Provisional application allows parts of a trade agreement to take effect before it is fully ratified by all parties, enabling immediate benefits while awaiting final approval.
Mercosur is a South American trade bloc that includes Argentina, Brazil, Paraguay, and Uruguay, aimed at promoting free trade and economic integration among its members.
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