By Sarah Ganter

On 17 January 2026, the European Union and the Mercosur countries (Argentina, Brazil, Paraguay and Uruguay) signed the EU–Mercosur Partnership Agreement (EMPA) and an accompanying Interim Trade Agreement (iTA) in Asunción, which marked the conclusion of the longest negotiations on a trade partnership to date. The agreement between the European Union and the South American economic alliance Mercado Común del Sur (Mercosur) was 26 years in the making and covers 30% of global gross domestic product, affecting over 700 million consumers. Recent trade wars and geopolitical upheavals are likely to have contributed to the eventual breakthrough.

However, the agreement is underpinned by power asymmetries that clearly favour European interests. Until now, 27% of Mercosur imports have come from China, with Europe in second place at 19% - a balance that is likely to shift as trade liberalisation takes effect. Estimates suggest that EU exports to the region could increase by almost 40%potentially EU companies four billion euros in customs duties. The potential future inclusion of Bolivia, which joined Mercosur in 2024 and holds 21% of global lithium reserves, is also attractive for Europe. 

For Mercosur countries, GDP growth of 0.3% is forecast, while exports to the EU could rise by 19.6%. Proponents in Europe are celebrating the agreement as a “clear signal for a fair and rules-based partnership in a time of global instability” and as a European commitment to multilateralism, democracy and free trade.

Calls not to sign the agreement

Trade unions, human rights and environmental organisations, by contrast, have long warned about the potential negative impacts of such a treaty and, until the very end, called for the agreement not to be signed.

Greenpeace argues that many of the traded goods contribute to environmental destruction, the climate crisis, biodiversity loss, social exploitation and human rights violations. Instead of the promised (re)industrialisation, representatives of the South American trade union movement fear a deepening of the subcontinent's historical dependence on its role as a supplier of raw materials to Europe and a market for industrial goods as primary goods from the agricultural and raw materials sector already account for around 80% of Mercosur exports to the EU. They are also concerned about a deterioration in working conditions and wages and raise concerns about the lack of transparency and social dialogue in the negotiation process.

The agreement’s A largely symbolic sustainability chapter Although the agreement’s sustainability chapter contains commitments to Agenda 2030, the Paris climate targets and a long list of other international frameworks, the EU Social Charter and the Mercosur Declaration on Social and Labor Standards are notably absent. A striking number of paragraphs begin with “encourage” or “promote.” Concrete instruments for implementation are lacking. Given that two of the four South American partner countries have withdrawn from global sustainability policy, the chapter lacks credibility, as Marita González, Technical Secretary of the Mercosur Economic and Social Forum, pointed out during the negotiations:

“How can it be that the text presents the Paris Agreement as binding, but both Paraguay and Argentina refuse to recognise climate change and the need for sustainable development to achieve the 2030 Agenda?” 

The potential rise of conflicts, deforestation and pesticides

Civil society organisations expect that the removal of trade barriers on various raw materials will exacerbate land conflicts, potentially leading to human rights violations and environmental destruction that disproportionately affect indigenous communities. The reduction of EU tariffs on soy, bioethanol, sugar, beef, and metal raw materials is already fuelling the destruction of tropical forests and other ecosystems that are critical for climate protection. 

In order to protect European agriculture, safeguard clauses were included at the last minute in the negotiations, allowing for the suspension of tariff reductions for individual products that may have a negative impact on the European market while Mercosur's demands, such as higher EU investment in the region or protection of public procurement, were largely ignored. The planned obligation of Mercosur countries to waive export taxes may prove disadvantageous if domestic demand rises in the long term and resources become scarcer – thereby contradicting the agreement’s stated aim of promoting local value creation in South America. 

Tariff reductions on chemicals are also problematic. Among other things, European companies export pesticides to the region that are banned in the European internal market. In 2024, a group of civil society organisations from South America and Germany therefore filed a complaint against Bayer AG with the German OECD national contact point, citing a failure to meet corporate due diligence obligations and violations of the OECD Guidelines for Multinational Enterprises. 

Although the sustainability chapter includes a clause on “responsible supply chain management,” this clause is explicitly excluded from the agreement’s dispute-settlement mechanism. This means that there are no specific instruments for enforcing the sustainability requirements while a compensation mechanism remains in place that compensates contracting parties for trade-restrictive sustainability laws.

Adoption hinges on a procedural manoeuvre to bypass national vetoes

The agreement still requires approval by the European Parliament and the member states. In principle, unanimity applies. However, the European Commission has sought to pre-empt potential vetoes from individual countries such as Austria or France by separating the economic and political components of the agreement. This would allow the economic part to be adopted without the approval of national parliaments, requiring only a qualified majority in the Council and a simple majority in the European Parliament. The European Parliament is not willing to accept this “work-around” and has called on the European Court Justice to rule on its admissibility.

The conclusion of the Mercosur agreement could be good news in terms of demonstrating political unity and strength in an extremely difficult international environment, which is no small matter in these times. But this doesn’t change the fact that in its current form, it‘s bad news for sustainability.