European Union–Mercosur : Commission announces provisional application of the free trade agreement

On 27 February, the European Commission indicated that the free trade agreement concluded with Mercosur could be applied provisionally, even before a possible ruling by the Court of Justice of the European Union (CJEU) on its legality. This announcement revives debate over the EU’s trade competence, Member States’ sovereignty, and the economic impact of a deal negotiated for more than two decades.

An agreement in principle concluded in 2019

Negotiations between the EU and Mercosur began in 1999 and led to a political agreement in June 2019. According to the European Commission, the partnership would create one of the largest free trade areas in the world, covering more than 700 million people.

According to Eurostat data, bilateral trade in goods between the two blocs reached approximately €110 billion in 2022, while trade in services amounted to nearly €34 billion. The Commission recalls that the EU is Mercosur’s leading trading partner. The agreement provides for the gradual elimination of customs duties on more than 90% of tariff lines. The European executive underlines that the agreement will save “more than €4 billion of duties per year” for EU companies — a figure cited in its official 2019 communication.

The legal basis for provisional application

Recourse to provisional application is governed by Article 218 of the Treaty on the Functioning of the European Union. In its Opinion 2/15 of 2017 on the EU–Singapore agreement, the CJEU held that “the common commercial policy falls within the exclusive competence of the European Union,” while specifying that certain provisions, notably in the field of non-direct investment, may fall under shared competence requiring national ratification.

The Commission states that provisional application would cover only areas falling strictly within EU competence, in order to legally secure the entry into force of the trade pillar.

Economic and environmental stakes

The European Commission argues that the agreement will strengthen opportunities for European industrial exports, particularly in the automotive, pharmaceutical and machinery sectors. It also highlights a chapter on trade and sustainable development, including commitments relating to the Paris Agreement.

In its official communication, the Commission states that the agreement contains “binding commitments on sustainable development.” However, several Member States and non-governmental organisations question the robustness of the environmental guarantees, particularly regarding deforestation in the Amazon.

A risk of increased competition for Africa?

Although Africa is not a party to the agreement, indirect effects are conceivable. The European Union remains Africa’s leading trading partner. According to Eurostat, the EU accounted for around 21% of Africa’s total trade in goods in 2022.

Greater access to the European market for Mercosur agricultural products (beef, sugar, ethanol, soybeans) could intensify competition for certain African exporters already benefiting from preferential agreements with the EU, notably under Economic Partnership Agreements (EPAs). A tariff reduction for Mercosur could therefore diminish the comparative advantage of some African countries on the European market.

Conversely, deeper EU–Mercosur integration could stimulate global value chains in which African economies are integrated, particularly in strategic raw materials. Moreover, the strengthening of European environmental standards could increase traceability and compliance requirements for all EU trading partners, including African countries.

A politically sensitive decision

The announcement comes in a context marked by debates over trade sovereignty and the ecological transition. Provisional application would allow for the rapid implementation of trade provisions, while giving national parliaments time to examine the mixed components of the agreement.

Should the CJEU be seized, its ruling could further clarify the division of competences between the Union and the Member States, with lasting implications for European trade policy.