Will the EU-South America trade deal become a problem for Ukraine?
On 9 January in Brussels, away from the spotlight and without any press engagement, EU member state ambassadors approved a draft decision authorising European Commission President Ursula von der Leyen to sign a trade agreement with the South American bloc MERCOSUR on behalf of the EU institutions.
This decision, along with the already scheduled signing ceremony on 17 January in Paraguay’s capital, is meant to draw a line under an exhausting political drama that marked the finale of a more than 25-year negotiating marathon.
Read more about the agreement and its consequences in the article by Nazar Bobytskyi of the Brussels Office of the Ukrainian Agribusiness Club (UCAB): Farmers’ protests and the impact on Ukraine: what consequences will the EU’s largest trade agreement have.
The Southern Common Market (MERCOSUR) agreement was signed on 26 March 1991, in Paraguay’s capital Asunción by Brazil, Argentina, Uruguay and Paraguay. Venezuela (2013, membership suspended in 2017) and Bolivia (2024) were invited to join the bloc later.
Annual trade turnover between the EU and MERCOSUR amounts to €111 billion.
At the same time, it reflects fairly balanced trade relations: EU exports to MERCOSUR reached €53 billion in 2024, while EU imports from MERCOSUR totalled €57 billion (with a slight positive current account balance in favour of the Latin American bloc).
EU exports to MERCOSUR consisted mainly of high value-added products: machinery and equipment (26.7%), pharmaceuticals (11.8%) and vehicles and aircraft (11.7%), which together accounted for about half of the total export value.
Negotiations between the European Communities and the Southern Common Market (MERCOSUR) began back in 1999. Since then, the draft agreement has continuously evolved and changed, reflecting the evolution of its parties, above all the EU.
The negotiations were difficult, overcoming the traditional import-substitution philosophy of South American economies and the protection of national industries through high import tariffs, as well as resistance from European farmers to any proposals to liberalise trade in agricultural products, which are a key export item for MERCOSUR countries.
A constant behind-the-scenes driver of the EU’s continued engagement in the negotiations was the automotive industry (primarily German).
The agreement with MERCOSUR will allow for a gradual reduction of import duties on European cars over 15 years, including electric vehicles, thereby slowly opening this market to European automakers.
The return to power of U.S. President Donald Trump became a catalyst for concluding the agreement. Europeans and MERCOSUR countries felt themselves to be "in the same boat" amid the MAGA hurricane.
On 17 January, the ceremonial signing of the trade segment of the EU–MERCOSUR Agreement will take place in Paraguay’s capital, Asunción.
This will mark a moment of personal triumph for Ursula von der Leyen and, at the same time, significantly strengthen the European Commission’s position in the upcoming and difficult ratification process.
However, even now it can be predicted that, even after ratification, it will be too early to put a full stop to this epic saga, among other reasons, because of Ukraine.
In the event of Ukraine’s rapid accession to the EU, the European Union and MERCOSUR countries will be forced to begin revising the agreement to take into account the new circumstance of a new EU member state joining – one that would significantly alter the balance of production and demand in the European agri-food market.
Incidentally, the preparation of the MERCOSUR agreement also influenced the updated trade agreement that the EU concluded with Ukraine in the autumn of 2025. Kyiv was likewise subjected to the "mirror measures" doctrine: Ukraine had to agree to accelerated implementation of several EU standards in the areas of plant protection products and animal health as a condition for extending the updated tariff quotas on imports of agricultural products.