EU - Mercosur Trade Deal Sparks Debate Over Economic Gains and Agricultural Risks

The European Union and the Mercosur bloc — Argentina, Brazil, Paraguay and Uruguay — have signed a long-awaited free trade agreement, concluding more than 25 years of negotiations.

The deal, signed in Asunción on Jan. 17, is seen by the European Commission as a strategically important step to strengthen ties with Latin America and expand opportunities for European industry. It is expected to reduce tariffs on a wide range of goods, including automobiles, machinery and pharmaceuticals, while boosting trade and investment flows. However, the agreement still requires approval by the European Parliament, where it has already triggered political controversy and protests from farming organizations demanding legal scrutiny and stronger safeguards for agriculture.

Criticism is focused primarily on the agricultural sector, which fears intensified competition from lower-cost South American producers and unequal production standards. The European Commission, led by Ursula von der Leyen, argues that the agreement includes tariff quotas, safeguard mechanisms and enhanced controls to protect sensitive sectors, as well as a dedicated support fund for farmers in the event of market disruptions. For Latvia, analysts expect the impact to be largely indirect: potential downward pressure on prices in vulnerable agricultural segments may be accompanied by new opportunities for exports of processed products and participation in broader EU supply chains. Overall, the agreement reflects the EU’s broader strategic choice in favor of deeper geopolitical and trade integration, even at the cost of heightened tensions with its own agricultural sector.