The Association Agreement between the European Union and Mercosur — Argentina, Brazil, Paraguay and Uruguay — may prove to be one of the most consequential interregional accords of this decade. Or it may not survive its own ratification process. File Photo by Patrick Seeger/EPA
The Association Agreement between the European Union and Mercosur — Argentina, Brazil, Paraguay and Uruguay — may prove to be one of the most consequential interregional accords of this decade. Or it may not survive its own ratification process. Both possibilities are now alive simultaneously.
Signed in Asunción on Jan. 17, after 25 years of negotiations, the agreement binds two blocs representing more than 700 million people and bilateral trade that reached €111 billion ($130.57 billion) in 2024. Its trade provisions eliminate or reduce tariffs on more than 90% of bilateral commerce, a package the European Commission estimates will save EU firms more than €4 billion ($4.71 billion) annually in duties alone. But just four days after the signing ceremony, the European Parliament voted 334 to 324 to refer the deal to the EU Court of Justice for a legality review, a process that could take two years and potentially derail the agreement altogether.
The geopolitical stakes make the political drama all the more significant.
A strategic hedge in a fragmented world
The EU-Mercosur deal was not designed primarily as a tariff instrument. It was designed as a response to a world fracturing along the fault lines of U.S.-China rivalry. For South American governments, the agreement offers geopolitical diversification: room to maneuver between Washington’s security architecture and Beijing’s commercial reach rather than being absorbed into either orbit.
For the European Union, the logic is equally strategic. Europe’s green and digital transitions require secure access to critical raw materials, and South America holds an outsized share of the minerals that power those transitions. According to a European Parliament Research Service analysis, South America holds 56.7% of the world’s lithium reserves, 36.3% of its copper, and 94.1% of its niobium. The EU has already moved to lock in some of this access: the bloc imports 82% of its niobium, essential for medical MRI technology and EV motors, entirely from Mercosur countries, primarily Brazil.
China controls approximately 58% of global lithium processing and 42% of copper processing, and accounted for 34% of Latin America’s mineral exports in 2023. In that context, the EU-Mercosur pact is not a trade agreement with geopolitical implications; it is a geopolitical agreement with trade mechanisms attached.
This matters for Europe’s vulnerability calculus. After Russia’s invasion of Ukraine exposed the catastrophic risks of resource dependency on a single partner, Brussels adopted a Critical Raw Materials Act in May 2024 mandating that no more than 65% of any strategic material at any processing stage should come from a single country by 2030. The Mercosur agreement is one of the instruments designed to meet that target.
Trade as governance
Modern trade agreements increasingly function as governance instruments, not merely tariff schedules. The EU-Mercosur deal binds compliance with the Paris Agreement as an essential clause, integrating climate commitments directly into the economic relationship. It also harmonizes regulatory standards across sectors from pharmaceuticals to food safety, and opens Brazilian federal government procurement, a market exceeding €8 billion annually, to European bidders.
As China expands infrastructure and commodity ties across Latin America through state-backed financing, and as Washington leans increasingly on security partnerships, the EU is positioning itself as a different kind of power: one that offers market access tied to sustainability and governance standards. The agreement thus introduces a triangular dynamic in South America defined less by military alignment than by competing regulatory architectures.
The security dimension
One of the deal’s less discussed but strategically significant elements is its security dimension. Expanding trade flows expand vulnerabilities: major container ports in both regions have faced growing pressure from organized crime, narcotrafficking and illicit financial networks that exploit commercial logistics. The agreement’s framework for intelligence sharing and operational cooperation between EU and Mercosur security institutions reflects an acknowledgment that supply chains are now strategic infrastructure.
Cybersecurity compounds this logic. The digitization of customs platforms, logistics systems and energy grids expands exposure to state and non-state actors alike. Harmonizing critical infrastructure protection standards across both blocs strengthens resilience at a moment when cyber operations have become a standard feature of great-power competition. Trade corridors are no longer neutral spaces. They are arenas of contestation.
The political obstacle: Europe’s farmers
The agreement’s greatest vulnerability is not geopolitical — it is domestic. France, the EU’s largest agricultural producer, has been the most vocal opponent, arguing that the deal exposes European farmers to competition from South American beef, poultry, sugar and soy produced under looser environmental and sanitary standards. Tractor convoys blocked roads across France and parts of Greece in the weeks surrounding the signing.
French opposition has found allies. When EU governments formally approved the agreement on Jan. 9, 2026, France, Ireland, Austria, Hungary and Poland voted against it. The European Parliament’s decision to seek a Court of Justice opinion, passed by just 10 votes, reflects how closely contested the internal European politics remain. A legal challenge of this kind typically takes around two years to resolve, during which the ratification process is suspended. If the Court finds elements of the deal incompatible with EU treaties, renegotiation with Mercosur countries would be required from scratch.
Supporters of the deal, led by Germany, Spain and the European Commission, argue that the agreement’s agricultural safeguards are adequate. The beef quota at issue amounts to 99,000 tonnes (109,128.82 U.S. tons) , roughly 220 grams (7.76 ounces) per EU citizen per year. But in France, where agriculture carries symbolic and electoral weight well beyond its economic share, those numbers have not shifted the political calculus.
Whether the European Commission moves to apply the trade component provisionally, which it can do after European Parliament consent, independent of the full association agreement, will be the key near-term test of the deal’s momentum.
A signal beyond the Atlantic
Regardless of what the EU Court of Justice eventually concludes, the EU-Mrcosur agreement has already sent a signal. It demonstrates that Europe and South America regard rule-based interregional integration as a viable alternative to the bloc politics that U.S.-China rivalry is otherwise encouraging. For Mercosur governments, the pact provides leverage and legitimacy in a global system that increasingly rewards alignment with one major power or another.
The agreement is not a military alliance, nor is it anti-China in design. But it does represent a structural preference for regulatory convergence over geopolitical subordination, an assertion that middle powers and regional blocs can shape the terms of their own integration rather than simply absorb the preferences of others.
Whether Europe’s internal politics allow that signal to become operational reality is the open question of 2026. The agreement’s fate will hinge not on its strategic logic, which is sound, but on whether democratic institutions in France, Ireland and the European Parliament ultimately judge the geopolitical case more compelling than the agricultural one.
In a fragmented world, that may be the most consequential test of all.
Óscar Álvarez Araya is a political scientist and former Costa Rican ambassador to Taiwan. The views and opinions expressed in this commentary are solely those of the author.
