Sustainability and protectionism are challenges for the Mercosur-EU agreement.

By Paula Wojcikiewicz Almeida and Pedro Henrique Lavinas Ortman.

Following the conclusion of negotiations in December 2024, the European Commission formally submitted the EU–Mercosur Agreement for ratification, marking a milestone in interregional relations. If implemented, the agreement will establish one of the world's largest free trade areas, strengthening political and economic ties between the European Union and Mercosur.

To facilitate ratification, the European Commission divided the agreement into two instruments: a comprehensive partnership agreement covering political dialogue and cooperation, and a provisional trade agreement addressing matters within the EU's exclusive competence. At the same time, it introduced complementary measures to respond to concerns over agriculture, environmental protection, and market safeguards.

These developments have generated significant debate on both sides of the Atlantic. In Brazil, particular attention has focused on the agreement's safeguard mechanisms and the innovative rebalancing clause, which allows trade disputes to be brought under the general dispute settlement mechanism when regulatory measures substantially affect the benefits expected under the agreement. This provision has attracted considerable academic and policy interest due to its potential implications for environmental measures such as the European Deforestation-Free Regulation (EUDR).

The article examines these recent developments within the broader context of the European Union's evolving trade strategy, highlighting the legal and political challenges of reconciling trade liberalization, sustainability objectives, and growing geopolitical tensions. It argues that the EU–Mercosur Agreement represents not only a landmark trade initiative but also a significant test for the future interaction between international trade and environmental governance.

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