EU–Mercosur agreement, continued: Where are we, and where are we headed?
In our earlier article “The EU–Mercosur trade agreement and access to the public procurement market,” we analysed the potential significance for public procurement of the trade deal, which was then still being negotiated. That was a few months ago, and since then the agreement has been signed, a decision has been taken on temporary application of the agreement, and the case has also been sent to the Court of Justice of the European Union for review. This is a good time to consider the current phase of implementation of the deal, what it means for businesses, and what scenarios may lie ahead.
Signing of the agreement
On 9 January 2026 the Council of the European Union consented to signing of the EU–Mercosur agreement, thus bringing to a close one of the EU’s longest negotiations. The signing ceremony was held on 17 January in Asunción, the capital of Paraguay, where officials from the EU and the five Mercosur member states (Argentina, Bolivia, Brazil, Paraguay and Uruguay) formally concluded the agreement after over 25 years of negotiations. Key political leaders of both regions took part in the event, including European Commission president Ursula von der Leyen, European Council president António Costa, President of Argentina Javier Milei, President of Bolivia Rodrigo Paz Pereira, President of Paraguay Santiago Peña, President of Uruguay Yamandú Orsi, and Brazilian Minister of Foreign Affairs Mauro Vieira. The signing was presented as a major political signal of strengthening free trade and multilateralism. As von der Leyen put it: “This agreement sends a very strong message to the world. It reflects a clear and deliberate choice. We choose fair trade over tariffs, we choose a productive, long-term partnership over isolation.”
For the agreement to enter into force…
EU law provides for a special procedure for concluding international agreements (Art. 218 of the Treaty on the Functioning of the European Union). The negotiations are conducted by the Commission, based on authorisation by the Council, and conclusion of the agreement requires a decision by the Council and the consent of the European Parliament. In this respect, there is a key distinction between agreements within the sole competence of the Union, and “mixed agreements” which also require ratification by the national parliaments of all of the member states. It is this distinction that dictates the legal architecture of the EU–Mercosur agreement.
Under the adopted framework, the agreement was divided into two separate legal instruments:
- Interim Trade Agreement (ITA)
- EU–Mercosur Partnership Agreement (EMPA).
This distinction allowed the matters subject to the exclusive competence of the EU to be siloed into the ITA, so that the ITA could enter into force without involving the national parliaments. In turn, the EMPA, as a mixed agreement, requires ratification by all of the national parliaments of the EU member states and the Mercosur countries. Consequently, full entry into force of the agreement remains uncertain.
Resistance from the European Parliament (21 January 2026)
From the start, the EU–Mercosur deal stirred a lot of controversy. European farmers feared a flood of cheaper products from South America, and ecological organisations raised the alarm over threats to the environment. The topic quickly reached the streets, as a wave of protests, particularly in the agricultural sector, spread across several member states. This did not escape the notice of politicians. Parties on both sides of the political arena were eager to exploit the mood of the society, making the deal a convenient weapon in internal disputes.
The European Parliament was supposed to consent to conclusion of the agreement under Art. 218(6) TFEU, but in this climate it made a spectacular move. Instead of taking up a vote on the deal, on 21 January 2026 it decided to submit the matter to the Court of Justice, seeking an opinion on the consistency with the EU treaties of both the EMPA and the ITA. There were 334 MEPs voting in favour of the application, 324 against, and 11 abstentions. This result not only blocked the fast track to ratification, but also exposed the deep political divisions surrounding the deal.
The European Parliament’s opposition is multifaceted. First, objections were raised over the legal architecture of the deal, particularly splitting the arrangement into the ITA and the EMPA. According to some MEPs, this construction was an attempt to circumvent the need to obtain the approval of national parliaments for key provisions of the deal. Second, criticism focused on the allegedly inadequate guarantees of environmental protection, including the obligations under the Paris Agreement and combatting deforestation of the Amazon. Third, it was argued that there are unequal conditions for competition in the agricultural sector, due to differences in sanitary standards and in the use of plant protection products, as well as the lack of “mirror clauses” ensuring the equivalence of production requirements.
Adoption of this resolution by the European Parliament launched the procedure under Art. 218(11) TFEU, as the EP sought a determination from the Court of Justice on the conformity of both agreements with the EU treaties. The EP’s doubts particularly concerned three issues:
- Whether splitting the agreement into two separate acts is compatible with Art. 218 (2) and (4) TFEU, and the principles of conferral of competence, institutional balance, and sincere cooperation
- Whether the rebalancing mechanism threatens the EU’s capacity to apply its law in the areas of environmental protection, public health, and food safety
- Whether the provisions of the agreement adversely affect application of the precautionary principle.
If the Court of Justice issues a negative opinion, the agreement cannot enter into force without amendment or revision. Proceedings for issuance of an opinion by the Court of Justice are by their nature time-consuming, and thus the state of legal uncertainty surrounding the deal may continue for a long time.
Provisional application—Commission decision of 27 February 2026
Does this mean that the ITA cannot enter into force until there is a ruling from the Court of Justice? To the contrary, it begins to apply from 1 May 2026.
On 9 January 2026 the Council adopted two separate decisions, one concerning the ITA (Decision (EU) 2026/183) and the other concerning the EMPA (Decision (EU) 2026/185), in which it not only authorised the Commission to sign both instruments on behalf of the EU, but also, under Art. 218(5) TFEU, consented to their provisional application. This mechanism allows an international agreement to be applied prior to its formal entry into force. In the case of the ITA, provisional application covers the entire agreement. In the case of the EMPA, provisional application is partial and covers only provisions falling with the EU’s exclusive competence.
On 23 March 2026 the European Commission made an official notification confirming that the ITA will be applied on a provisional basis from 1 May 2026 in dealings between the EU and the Mercosur countries that complete their internal ratification procedures and notify the EU accordingly before the end of March. All of the Mercosur members have completed the ratification process (Argentina and Uruguay on 26 February 2026, Brazil on 17 March 2026, and Paraguay on 30 March 2026). Thus there is nothing standing in the way of provisional application of the agreement.
Regulation (EU) 2026/687 implementing bilateral safeguard clauses for agricultural products
The European Commission is using the period of provisional application of the ITA to persuade the member states and MEPs to ratify the agreement. A key step in this direction was adoption on 11 March 2026 of Regulation (EU) 2026/687, establishing bilateral safeguard clauses for sensitive agricultural sectors, such as beef, poultry, sugar and ethanol.
The regulation provides for the possibility of temporary suspension of tariff preferences in the event of disruption to the EU market. This mechanism has a relatively low triggering threshold—for example, an increase in imports of certain products by 5%, accompanied by a decline in their prices by at least 5% as compared to EU prices obliges the European Commission to launch an investigation. This procedure can be initiated not only by EU institutions, but also by member states or industry representatives. Additionally, an accelerated action plan is provided for; in the case of sensitive products, provisional measures can be applied within as little as 21 days after launch of an investigation, and the Commission is required to regularly monitor the market and present periodic reports.
But these solutions are not uncontroversial. It is mainly their unilateral nature that is attacked in public debate. These clauses are not included in the agreement itself, but function solely as part of EU law, which throws into doubt their effectiveness against partners from Mercosur. Critics also point to the lack of “mirror clauses” that would ensure equal production standards, particularly with respect to the use of pesticides and standards for animal welfare. But introduction of such solutions would require renegotiation of the agreement, which was ultimately rejected in light of the long-term, complicated negotiating process.
Proceeding before the Court of Justice
The proceeding before the Court of Justice in the case of the EU–Mercosur agreement is entering a decisive phase. The case was registered on 25 March 2026 under case no. Avis 1/26. For now, there is no information on any further actions taken by the court in this proceeding.
Alongside action in the European Parliament, positions are being developed in the member states, including Poland. According to current reports, the Polish government does not plan to file a separate complaint with the Court of Justice, despite earlier signals that such a step was being considered. Instead, it is only expected that Poland will join the proceeding initiated by the European Parliament—an approach called for in particular by the Polish People’s Party (PSL) and President Karol Nawrocki. If Poland does decide on this step, it will become an active party to the proceeding and gain an influence on the ultimate ruling.
What next?
The further fate of the EU–Mercosur deal is to some extent already preordained, but partly uncertain, depending on both the ruling by the Court of Justice and further political decisions.
First and foremost, provisional application of the ITA begins 1 May 2026. From that date, the commercial provisions concerning liberalisation of exchange of goods and services, including lifting of customs duties, elimination of trade barriers, the public procurement rules, and intellectual property provisions, will be in force. However, the remaining issues, particularly full access to the public procurement market, protection of investments, and mechanisms for political cooperation, will have to wait for full ratification of the EMPA by the national parliaments of the EU member states.
The ruling by the Court of Justice could take various forms. If the court finds that the ITA, the EMPA or both are inconsistent with the EU treaties, it will not be possible for the challenged agreement to enter into force without relevant amendments, which in an extreme case could also undermine the provisional application of the ITA. But if the Court of Justice upholds the conformity of both agreements with the EU treaties, their provisional application will continue, and after obtaining the consent of the European Parliament and completing full ratification of the EMPA by the national parliaments of the member states, the ITA will be superseded by the EMPA as a comprehensive instrument covering all of the subject matter of the agreement.
From the perspective of businesses, the key conclusion is clear: provisional application of the ITA from 1 May 2026 onward will mean a real opening of the market for trade in goods and services, but full implementation of the agreement—including access to the public procurement market and protection of investments—will depend on:
- The result of the proceeding before the Court of Justice
- Eventual ratification of the ITA by the European Parliament, and
- Ratification of the EMPA in the EU member states.
Consequently, ongoing monitoring of these processes is essential for taking informed business decisions.
Filip Olszówka, Dispute Resolution & Arbitration practice, Julia Rutka, Infrastructure, Transport, Public Procurement & PPP practice, Wardyński & Partners
