The European Union and the MERCOSUR countries – Argentina, Brazil, Paraguay and Uruguay – signed a partnership agreement and an interim trade agreement on 17 January. EU Commission President Ursula von der Leyen travelled to Paraguay for the event. 

Following approval in the European Council, Federal Chancellor Friedrich Merz said: “Concluding the EU-MERCOSUR agreement is a milestone in European trade policy and an important signal of our strategic sovereignty and ability to act. The agreement will strengthen our economy and trade relations with our partners in South America – which is good for Germany and for Europe.” However, he described the 25 years of negotiations as “too long”. That is why it is now important to finalise the next free trade agreements quickly, he said.

Stimulus for growth, innovation and employment

At a time of global upheaval, the MERCOSUR partnership agreement is a symbol of rule-based international cooperation. The core of the agreement is the trade section, which is intended to provide fresh impetus for growth, innovation and employment by reducing tariffs and trade barriers. By abolishing the high MERCOSUR tariffs, EU exporters could save more than four billion euros a year in tariffs. 

Trading with MERCOSUR already supports more than 600,000 jobs in the European Union, while at the same time maintaining strict EU regulations for food safety and the health of humans, animals and plants. 

The agreement also contributes to more resilient and diversified supply chains. Companies from the EU, especially export-oriented German SMEs, will gain better access to the so far relatively untapped market of South America, encompassing over 260 million people.

Further approval required

The EU-MERCOSUR agreement is divided into two parts: a comprehensive partnership agreement and an interim trade agreement. 

The interim trade agreement only covers the trade part of the MERCOSUR agreement and is considered an EU-only agreement. It will therefore function as an independent agreement until the partnership agreement comes into full force. It still requires the approval of the European Parliament, but not ratification by the EU member states. This will allow it to come into force more quickly and benefit the economy sooner. 

At the beginning of January, the European Council approved the signing and provisional application of both agreements. The Federal Cabinet gave its approval for them to be signed in December 2025.

Unlike the trade agreement, the partnership agreement still has to be ratified by all national parliaments following approval by the European Parliament.

Common values and standards

The MERCOSUR agreement enshrines respect for democratic principles, human rights, fundamental freedoms and the principles of the rule of law and supports the non-proliferation of weapons of mass destruction as its core shared values. The contracting parties also undertake to comply with the Paris Agreement and the UN Convention on Climate Change.

Furthermore, the contractual partners undertake to effectively implement international environmental, labour and social standards. The partnership agreement thus fulfils an increased demand for responsible and sustainable international cooperation.

The EU has been negotiating with the MERCOSUR countries (Argentina, Brazil, Uruguay and Paraguay) for 25 years. The agreement aims to create one of the world’s largest free trade zones, with over 700 million inhabitants.