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Europe Tries the Mercosur Test Again

Ursula von der Leyen justified the concessions made to Donald Trump in the Turnberry agreement at the end of July with two main arguments: it was a necessary move to avoid worse tariffs, and the EU has other cards to play. While the United States is the primary destination for European trade, wrote the president of the Brussels Commission in Le Figaro, it accounts for only about 20% of our exports of goods. That is why Europe will continue to strengthen and diversify its trade links with countries around the world.

America and Asia

This attempt is underway. On September 3rd, the von der Leyen Commission proposed to the European Council, the intergovernmental body of the 27 States, to ratify both the trade agreement with the Latin American bloc, Mercosur, and a modernisation of the existing agreement with Mexico. In the EU, the Commission has centralised trade policy in a federal power that negotiates international agreements. However, in order to implement them, approval is required from the Council, with a majority of at least fifteen governments representing 65% of the European population, and from the Strasbourg Parliament by a simple majority.

On September 23rd, in Bali, EU Trade Commissioner Maroš Šefčovič announced the conclusion of free trade negotiations with Indonesia, following agreements reached in recent years with Singapore and Vietnam. In the days that followed, in Kuala Lumpur, Šefčovič highlighted the ongoing negotiations with Thailand, the Philippines, and Malaysia and also recalled the original project, shelved in 2010, for a region-to-region agreement between the EU and ASEAN, the Association of ten economies in Southeast Asia. Could the recurring hypothesis of European convergence with the Japanese-led Trans-Pacific Partnership (TPP) be accompanied by EU cooperation with RCEP, the major Asian trade agreement based precisely on ASEAN? Beijing might perhaps welcome a solution to bring it closer to Brussels, as an alternative or complement to the Euro-Chinese CAI treaty, which has been on ice for too long.

Openness and protection

On October 8th, the Commission proposed further regulation to strengthen safeguards for the agricultural sector in the agreement with Mercosur. The agreement already provides for a strengthening of the compensation funds of the Common Agricultural Policy (CAP) and a quota system that limits openness for certain particularly sensitive products, such as beef. The new mechanism would ensure that, in the event of an excessive increase in imports or a fall in prices, a European investigation would quickly assess the extent of the economic damage and could temporarily withdraw the preferential conditions granted to Mercosur countries. We have listened to our farmers, we have reflected and now we have acted, in their interests, said Commissioner Šefčovič, expressing his confidence that with this cast-iron legal guarantee it will be possible to overcome the sector’s long-standing opposition, which for years, especially in France, has been the main obstacle to the agreement with Mercosur.

The Commission hopes that its two co-legislators – the Council and the European Parliament – will approve this new regulation by December, so that it can be formalised before the agreement is signed at the last Mercosur summit under the Brazilian presidency. It should be remembered that in December 2024, immediately after the fall of Michel Barnier’s government in Paris, von der Leyen flew to Montevideo to celebrate a preliminary political agreement with the leaders of Brazil, Argentina, Uruguay, and Paraguay, defying the open opposition of French President Emmanuel Macron.

Will this be the right time?

The same goal was achieved in 2019 by the Commission chaired by Jean-Claude Juncker, flanked by Macron and German Chancellor Angela Merkel. European ratification was then blocked by agricultural resistance in the EU and, mainly, by the French political veto. Will the new guarantees proposed by Brussels be enough this time? Will France's political instability, with one prime minister after another resigning, be an advantage or an obstacle to European consensus? With Giorgia Meloni’s Italian government leaning towards approval, Paris no longer seems able to prevent a qualified majority in the European Council. Will the Commission proceed by putting France in the minority, as former French Trade Commissioner Pascal Lamy suggested? A year ago, before von der Leyen’s push in Montevideo, a multi-party front of more than 600 French MPs, senators, and French members of European Parliament, launched a dramatic appeal not to ignore Paris’s opposition, evoking the risk of an anti-European populist drift in the political heart of the continent. Recently, unofficial statements from government sources have suggested that Paris may not oppose the approval of the agreement, voting in favour or abstaining.

Meanwhile, in the Strasbourg Parliament, some MPs are calling for an assessment by the EU Court of Justice of the rebalancing mechanism provided for in the agreement, which promises compensation to Mercosur countries if future European laws hinder their exports. Critics argue that this undermines European sovereignty and the effectiveness of its rules, in the field of environmental protection, for example.

Advance or delay?

Despite this resistance, there is broad consensus in Europe and among the main economic fractions in France itself in favour of the agreement with Mercosur, after negotiations that have now lasted more than a quarter of a century. In recent weeks, big economic groups have increased the pressure. Now is the time is the title of a campaign launched in September by BusinessEurope, which brings together the German BDI, the French Medef, and other major national industrial associations. On October 13th, 26 European lobbies from a variety of sectors launched a joint appeal to the institutions, calling for the rapid ratification of the Mercosur agreement: A beacon in the EU’s diversification strategy. Among the signatories was the European Automobile Manufacturers’ Association (ACEA), which expects to triple its exports to Mercosur over the next fifteen years thanks to the gradual elimination of the current high tariffs.

An economic study by the Commission highlights that the large Mercosur market, with around 270 million inhabitants and a GDP of €2.7 trillion in 2024, one sixth of that of the European Union, has few free trade agreements (FTAs) with other partners and no FTAs with any other major industrialised economy, which gives the EU a first-mover advantage. On the other hand, the same report admits that the goal is to reverse the deterioration of EU market shares in Mercosur imports, which has fallen from almost 30% in 2000 to the current 19%, overtaken by China, which in the same period has risen sharply from less than 5% to over 27%.

Strategic review

David Henig, a British analyst at the ECIPE research centre in Brussels, has written that the battle for ratification of the agreement with Mercosur is a make-or-break moment for the EU. This is an exaggerated assessment, which we obviously cannot share, but it is true that this is a trade operation that has become increasingly strategically important for the Union over the years. Both to keep pace with the imperialistic maturation of China, which has already broken through with its goods and capital on the South American market, and to respond to the unilateralist turn of the United States and Trump’s tariff war. For the Financial Times, the approval of the agreement with Mercosur represents a test of EU’s decisiveness, which the block should not fail at this time of maximum pressure against the rules-based international cooperation.

Meanwhile, Trump is acting in the region with his characteristic disruptive and contradictory style. He is putting pressure on Brazil with heavy tariffs, motivated by the legal fate of former President Jair Bolsonaro. This presumably increases the importance of the agreement with the EU for President Lula, who could accept the new guarantees offered by Brussels to European farmers. In recent weeks, the White House has thrown a multi-billion-pound lifeline to Argentina in its chronic financial crisis, openly conditional on a confirmation of President Javier Milei’s policies. In Latin America, the capital, goods, and spheres of influence of all great powers – the US, the EU, Japan, and China – intersect and clash: it is a centuries-old imperialist game in which Europe’s claim to make the first move sounds curiously formal.

Goods and missiles

In a speech entitled Trade Wars and Central Banks: Lessons From 2025 on September 30th in Helsinki, ECB President Christine Lagarde spoke of a new world in which politicians must combine financial reflection with geoeconomics. This term, coined by Edward Luttwak in 1990, does not refer to protectionism in the old sense of sheltering vulnerable industries. Instead, it is trade deployed as a tool of power, a strategy of influence and dominance. Luttwak’s formula has been circulating again for some time, as we witnessed in these pages ten years ago. The real novelty, according to the ECB governor, is that Europe finds itself for the first time on the receiving end of this approach, hit by Trump’s tariffs and forced into the asymmetrical agreement in July. However, the economic impact has so far been less severe than expected – Lagarde claims – thanks to a two-pronged response: the EU has pushed ahead with new trade agreements and, above all, governments in Europe have committed to the largest increase in rearmament in decades.

This is not a new world, it is the world of imperialism, which has existed for more than a century. What is new is the crisis in the world order, and a fundamental political fact is the strategy Europe has chosen to address it: accelerating free trade agreements and strengthening its defence. Literally, the armed liberism that we hypothesised a couple of years ago could be the sign of a cycle in which, for the moment, multilateralism and global rearmament coexist.

Lotta Comunista, October 2025

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