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On Friday, the European Commission and Mercosur countries announced a trade agreement creating a free trade area. European Commission President Ursula von der Leyen announced the milestone from a summit in Uruguay, describing the deal as “ambitious and balanced.” She emphasized its importance, stating it was “not only an economic opportunity, it is a political necessity.”

Uruguayan President Luis Lacalle Pou, speaking for Mercosur, framed the agreement as a valuable opportunity rather than an instant solution. Negotiators from both blocs gathered in Montevideo to finalize the agreement, which now awaits approval from the 27 EU member states.

French Opposition Highlights Divisions Over the Agreement

France strongly opposes the deal and has rallied other countries, including Poland, to form a coalition against it. Italy has also expressed conditional support, demanding guarantees for its farmers. Ireland, the Netherlands, and Austria remain undecided.

Supporters of the agreement, including Germany and Spain, highlight its potential to open markets for Europeans and counter China’s growing influence in Latin America. German Chancellor Olaf Scholz praised the deal on X, calling it a significant step for growth and competitiveness. Spanish Prime Minister Pedro Sanchez pledged Spain’s support, emphasizing trade openness with Latin America as a path to shared prosperity.

The deal still requires approval by EU member states and the European Parliament. The European People’s Party described the agreement as a historic milestone, strengthening ties between the two regions.

Environmental Safeguards and Tariff Adjustments

To address previous concerns, the agreement incorporates binding environmental standards, enabling suspension if standards are violated. Commitments include measures to stop illegal deforestation in Mercosur countries. The deal removes tariffs on goods like wine, cheese, automobiles, and clothing, while imposing quotas for sensitive products such as beef, poultry, and sugar. Beef imports will gradually increase over seven years, capped at 90,000 tonnes annually, around 1.6% of EU production. Safeguards are in place for potential market disturbances.

French wine exports, currently struggling, could benefit significantly from the agreement, according to officials. However, French President Emmanuel Macron faces political challenges as he opposes the deal while managing a government crisis after the collapse of Prime Minister Michel Barnier’s administration.