Fernando Mario Milano (Professor of Integration Law at the National University of Rosario and University of Buenos Aires, Argentina)
With both blocs concluding negotiations on the EU-Mercosur Trade Agreement, it is pertinent to conduct a cursory study on the potential implications of some of the issues linked to the entry into force of its trade pillar, something that, as we will see later, is still far from happening. Of course, this critical analysis should not lead to the interpretation that our position is completely contrary to the provisions of the agreement; it should only serve to highlight those aspects on which there are considerable disagreements between both blocs, which may even render it inapplicable in practice.
As is well known, after 20 years of negotiations, on 28 June 2019, the European Union (“EU”) and Mercosur reached an agreement “in principle” for a “strategic” partnership. This agreement includes not only economic and trade aspects, but also political and cooperation aspects. It consists of three pillars: political dialogue, trade and cooperation.[1]
In view of the disagreements that have arisen between the EU and Mercosur on certain sensitive matters – such as deforestation for agricultural production in the territories of Mercosur countries (particularly in relation to Brazil)[2] – at the request of the EU, an amendment was made to the agreement reached in 2019. In this amendment, in relation to chapter 14 of the trade pillar, a series of parameters to be met for environmental protection were established, in line with the 2015 United Nations (“UN”) Paris Agreement on climate change, duly signed by all Mercosur and EU member countries.[3]
The agreement establishes three long-term objectives as a guide for all nations: i) substantially reducing greenhouse gas emissions to limit the global temperature increase this century to 2° C, and strive to limit this increase to no more than just 1.5° C; ii) review countries’ commitments every five years; and iii) provide financing to developing countries so they can strengthen resilience, and mitigate and improve their capacity to adapt to the impacts of climate change.
The European Green Deal (“EGD”),[4] approved in 2020, also played a role in this issue. It is a set of political initiatives aimed at making the EU climate-neutral by 2050. To this end, the European Commission is working on a strategic plan with a specific goal: reducing greenhouse gas emissions, which are set for a 50% reduction minimum by 2030, and 55% reduction compared to 1990 levels. This initiative aims to review every existing law on climate issues and also introduce new legislation on topics such as the circular economy, building renovation, biodiversity, sustainable agriculture, and innovation.
As if all this were not enough, this wealth of rules and regulations on environmental protection has been supplemented by Regulation (EU) 2023/1115 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation.[5] This Regulation is part of the European Union Biodiversity Strategy for 2030, the New European Union Forest Strategy for 2030, and the aforementioned EGD. It establishes binding rules for EU operators and traders who trade in or export timber, rubber, coffee, cocoa, palm oil, and soybeans from the EU market, with the aim of minimising the EU’s contribution to global deforestation and forest degradation and reducing the EU’s contribution to greenhouse gas emissions and global biodiversity loss.
This regulation establishes an obligation to carry out due diligence in the marketing of these products; operators will be required to trace the commodities they sell back to the plot of land where they were produced, and this will mean the creation of a comparative assessment system, which assigns a level of risk related to deforestation and forest degradation (low, standard, or high) to EU Member States and third countries, among other relevant issues. In the event of non-compliance, taking into account the environmental damage and the value of the goods at stake, proportionate pecuniary sanctions are established.
This regulation was scheduled to enter into force on 30 December 2024, but was extended until 30 December 2025, taking into account the feasibility of its correct application and the potential impact it could have.[6]
Another sensitive aspect negotiated in the agreement concerns chapter 7 of the trade pillar, which refers to technical barriers to trade.[7] In this area, the EU has demonstrated very thorough development, having issued a considerable set of standards enforced throughout the European integration zone, which places it in a much more advantageous position than Mercosur.
For example, the EU has technical standards, including but not limited to: the lift sector and its safety components (Directive 2014/33/EU); the placing of radio equipment on the EU market (Directive 2014/53/EU);[8] the harmonisation of the laws relating to the making available on the market of measuring instruments (Directive 2014/32/EU);[9] toy safety (Directive 2009/48/EU);[10] eco-design requirements applicable to energy-related products (Directive 2009/125/EC[11] and Regulation (EU) 2017/1369);[12] and many more.
Although the objectives of every technical standard are linked to the health, hygiene and/or people’s safety, these laudable goals often conceal the imposition of tariff and non-tariff barriers. In other words, the advantages that can be found in the trade of goods and services with tariff reductions would be offset by mandatory compliance with technical standards, with obvious obstacles when it comes to accessibility to the European market, thereby discouraging reciprocal trade flows.
In addition to all this, on 6 December 2024, progress was made in concluding negotiations on the EU-Mercosur agreement. This was achieved at the 65th Summit of Presidents of Mercosur Member States and Associates, held in Montevideo, the capital of the Eastern Republic of Uruguay and Mercosur’s administrative headquarters. In this respect, the political importance of the decision taken by the European Commission, led by its President, Ursula von der Leyen, should be emphasised; a decision considered strategic by a significant number of scholars and analysts.
The agreement now has a long way to go in terms of the measures to be taken to bring it into force. This is a process that will require arduous negotiations. The next stage will be the legal review of the agreement, which will then be submitted for approval by the national parliaments of all the parties, in addition to the necessary approvals in both blocs. The final stage involves the corresponding ratifications in each of the countries involved.
It is extremely important to emphasise the importance of advancing the Agreement until its long-awaited entry into force. Perhaps this time will allow Mercosur states to adopt environmental protection provisions, such as those related to deforestation and environmental degradation.
It is noteworthy that in the new annex, the EU committed to offering additional incentives such as quotas or lower tariffs for “sustainable products” exported by Mercosur. This commitment constitutes a significant incentive for this sector, given that, in theory, it will obtain improved access to the European market as long as their products respect environmental protection principles, giving it an upper hand over potential competitors on the international stage.[13]
Likewise, regarding import requirements, Mercosur and the EU agreed to adopt a cooperative approach to address compliance with the sustainability requirements that the EU will require in the short and medium term, particularly in the aforementioned new Deforestation regulation, taking into account the different levels of development, capacities, and national legislation.
Related to this, the recognition of national monitoring and certification systems is a highly significant achievement for Mercosur countries, given the unilateral sustainable development measures implemented by the EU – for example, the EGD – which exporters worldwide must comply with in order to enter the European market. With the chapter on trade and sustainable development, the EU will take into account the monitoring and certification systems already implemented by Argentina, Brazil, Paraguay, and Uruguay, which would constitute a considerable advantage over other competitors. However, many questions arise about whether the actual conditions are met – that is, the real likelihood of meeting such strict standards – which could ultimately undermine the agreement, given that Mercosur countries are known to be global leaders in agricultural production, with highly competitive sectors. This could prevent them from introducing their products in the European market, which would lead to a resounding failure if the EU does not properly address this issue.
Energy production is of significant importance in the current geopolitical landscape, and the agreement could be a clear solution for both Mercosur and the EU. The EU’s historical dependence on Russia for oil and especially gas is well known. This dependence no longer exists as it once did since the current conflict between Russia and Ukraine resumed in 2022.
This reality could lead to Mercosur providing this support, which is all the more reason to move forward with the implementation of the agreement in question. Offshore oil production in Brazil, coupled with the investments required by both the oil and gas sectors in the Vaca Muerta complex in the province of Neuquén, Argentina, are extremely important to consider for making progress in this direction.
In this sense, and if the necessary investments are made through the adoption of liquefaction processes, it is said that Argentina will become a major player on the global stage. As such, it becomes clearer by the day the benefits the agreement allows for the EU, especially when it comes to tackling the issue of energy sourcing/production.
Ultimately, time will tell whether progress can be made toward this goal, or whether it will remain merely a declaration of intent, as has been the case for more than 25 years.[14]
[1] Gisela Grieger, Gyorgyi Macsai, “EU-Mercosur Partnership Agreement: Trade pillar – Briefing”, European Parliament Research Service, March 2025, accessed April 07, 2025, https://www.europarl.europa.eu/RegData/etudes/BRIE/2025/769537/EPRS_BRI(2025)769537_EN.pdf.
[2] Jordi Cañas, “EU-Mercosur Partnership Agreement”, Legislative Train Schedule, December 15, 2019, accessed April 07, 2025, https://www.europarl.europa.eu/legislative-train/theme-international-trade-inta/file-eu-mercosur-association-agreement?sid=3201.
[3] United Nations, “El Acuerdo de París”, accessed April 07, 2025, https://www.un.org/es/climatechange/paris-agreement.
[4] European Commission, “El Pacto Verde Europeo – Trabajar para ser el primer continente climáticamente neutro”, accessed April 07, 2025, https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal_es.
[5] EUR-Lex, “Lucha contra la deforestación y la degradación forestal”, December 08, 2023, acessed April 07, 2025, https://eur-lex.europa.eu/ES/legal-content/summary/fighting-deforestation-and-forest-degradation.html?fromSummary=20.
[6] European Parliament, “EU deforestation law: Parliament set to adopt one-year delay”, December 17, 2024, accessed April 07, 2025, https://www.europarl.europa.eu/news/en/agenda/briefing/2024-12-16/8/eu-deforestation-law-parliament-set-to-adopt-one-year-delay. Lars Raedschelders, Catherine Sheffield, “Delay in application of the EU Deforestation Regulation (EUDR) confirmed”, fieldfisher, December 18, 2024, accessed April 07, 2025, https://www.fieldfisher.com/en-be/locations/belgium/insights/delay-in-application-of-the-eu-deforestation-regulation.
[7] Fernando Mario Milano, “Algunos aspectos divergentes en la implementación del Acuerdo entre la Unión Europea y el Mercosur”, Derecho de la Integración, v. 18 (2021): 168-179.
[8] See consolidated text: Directive 2014/53/EU of the European Parliament and of the Council of 16 April 2014 on the harmonisation of the laws of the Member States relating to the making available on the market of radio equipment and repealing Directive 1999/5/EC.
[9] See consolidated text: Directive 2014/32/EU of the European Parliament and of the Council of 26 February 2014 on the harmonisation of the laws of the Member States relating to the making available on the market of measuring instruments (recast) (Text with EEA relevance).
[10] See consolidated text: Directive 2009/48/EC of the European Parliament and of the Council of 18 June 2009 on the safety of toys.
[11] See consolidated text: Directive 2009/125/EC of the European Parliament and of the Council of 21 October 2009 establishing a framework for the setting of ecodesign requirements for energy-related products (recast).
[12] See consolidated text: Regulation (EU) 2017/1369 of the European Parliament and of the Council of 4 July 2017 setting a framework for energy labelling and repealing Directive 2010/30/EU (Text with EEA relevance).
[13] Ministerio das Relaciones Exteriores, Comercio Internacional y Culto – República Argentina, “MERCOSUR-UE: Principales ejes del Acuerdo”, accessed April 07, 2025, https://www.cancilleria.gob.ar/es/destacados/mercosur-ue-principales-ejes-del-acuerdo. Delegation of the European Union to Argentina, “Acuerdo UE-Mercosur”, January 22, 2025, accessed April 07, 2025, https://www.eeas.europa.eu/delegations/argentina/acuerdo-ue-–-mercosur_und_en. Ministerio de Relaciones Exteriores, “Acuerdo de Asociación entre el Mercosur y la Unión Europea: textos negociados entre 2023 y 2024”, December 11, 2024, accessed April 07, 2024, https://www.gub.uy/ministerio-relaciones-exteriores/comunicacion/comunicados/acuerdo-asociacion-entre-mercosur-union-europea-textos-negociados-entre.
[14] José Antonio Sanahuja and Jorge Damián Rodríguez, “El Acuerdo Mercosur-Unión Europea: Escenarios y opciones para la autonomía estratégica, la transformación productiva y la transición social y ecológica”, Análisis Carolina, v. 20 (2021).
Picture credit: by Tom Fisk on pexels.com.