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What's in EU-Mercosur deal and why is it contentious?

The EU–Mercosur trade deal would significantly cut tariffs and open markets, but internal EU divisions—especially among Italy, France, Poland and Hungary—are complicating its approval and forcing Brussels to add extra safeguards rather than reopen the text of the agreement.

Reuters WORLD
Published December 17,2025
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The following are details of a trade accord between the EU and South America's Mercosur bloc. The EU executive is struggling to win support from Italy and deal critics France, Poland and Hungary, which would be needed to sign the agreement by the end of the year.

TARIFF CUTS, LARGER FARM PRODUCE QUOTAS

Mercosur will remove duties on 91% of EU exports, including for cars, from a current 35% over a period of 15 years. The EU will progressively remove duties on 92% of Mercosur exports over a period of up to 10 years.

Mercosur will also remove duties on EU agriculture-based products, such as the 17% on wines and 20-35% on spirits.

For more sensitive farm products, the EU will offer increased quotas, including 99,000 metric tons more beef, while Mercosur will give the EU a duty-free 30,000-ton quota for cheeses.

There are also EU quotas for poultry, pork, sugar, ethanol, rice, honey, maize and sweet corn and for Mercosur on milk powders and infant formula.

The extra beef represents 1.6% of EU beef consumption and 1.4% for poultry. Proponents of the deal point to existing imports as proof that Mercosur does meet EU standards.

The deal recognizes 350 geographic indications to prevent imitation of certain traditional EU foodstuffs such as Parmigiano Reggiano cheese.

WHAT PROPONENTS SAY

The Commission and proponents such as Germany and Spain say the deal offers a route away from reliance on China, especially for critical minerals such as battery metal lithium. It will ensure there are no taxes on the export of most such materials.

Proponents also say it offers relief from the impact of tariffs imposed by U.S. President Donald Trump.

The Commission says the free trade agreement is the largest it has ever agreed in terms of tariff reductions, removing over 4 billion euros ($4.7 billion) of duties on EU exports annually, and a necessary part of the EU's push to diversify its trade ties.

It adds that, given Mercosur's modest collection of trade agreements, the EU would have an early-mover advantage and notes that EU companies will be able to bid for public contracts in Mercosur on the same terms as local suppliers - something Mercosur has not previously offered in trade accords.

There are also potential safeguard measures to address possible market disturbances.

WHAT CRITICS SAY

European farmers protest that a deal would lead to cheap imports of South American commodities, notably beef, that do not meet the EU's green and food safety standards. The European Commission says the EU's standards will not be relaxed.

The deal does include commitments on the environment, including to prevent further deforestation after 2030. However, green groups say it lacks enforceable measures.

Friends of the Earth has called the deal "climate-wrecking" and says it would lead to increased deforestation as Mercosur countries would sell more farm produce and raw materials, often sourced from forested areas, including the Amazon.

France, the EU's largest beef producer, has said it would sign the free trade agreement only if it "safeguards the interests" of French and EU farming.

Italy, Hungary and Poland have also expressed opposition. Together, the four countries could block the deal.

HOW HAS EU TRIED TO WIN OVER SCEPTICS?

When the Commission put the agreement forward for approval in September, it set out a mechanism whereby preferential Mercosur access for sensitive farm products, such as beef, could be suspended.

The trigger for the Commission to assess the need for such safeguards would be if import volumes rose by more than 10% or prices fell by that amount in one or more EU country. The European Parliament on Tuesday backed a lower trigger value of 5%.

The EU executive said it would study potential alignment of production standards between domestic and imported products, notably regarding pesticides and animal welfare.

The Commission also said it would strengthen border controls on food, animal and plant products entering the EU by increasing the number of audits and checks in third countries.

Finally, it says the next EU budget will offer a 6.3 billion euro crisis fund for EU farmers, which could cover the "unlikely event" that the agreement harms EU agricultural markets.