As Donald Trump begins his second term as President of the United States this week, which indicates that we are going to have an ‘intense period’ in terms of trade geopolitics, we publish this new blog post; this time focusing on the EU-Mercosur Agreement.
We have decided to carry out this analysis of the EU-Mercosur Agreement precisely at this time given the importance that this agreement could have for the two trade blocs (the EU and Mercosur) in view of the outlook we may have over the next few years.
The idea of this article is to analyse this Agreement from the point of view of trade geopolitics, so we will not enter the debate of how harmful or not it may be for some sectors. For that we already have the newspaper reports and countless articles by international trade experts; instead, we want to approach it from the perspective of geo-strategy.
IMPORTANCE OF THE EU-MERCOSUR AGREEMENT
‘This pact positioned the EU and Mercosur as key players in world trade’.
The EU-MERCOSUR agreement, negotiated for more than two decades, is one of the most ambitious trade deals ever proposed between two regional blocs. It involves more than 780 million people, covers approximately 25% of the world's GDP and combined international trade exceeding €125 billion annually.
This is one of the most important trade agreements ever signed, since, as we commented in our blog posts on World Trade Outlook 2025 and World Trade Analysis 2024, the Latin American region is one of the main trading regions in the world with interesting growth prospects. In fact, both trading blocs (MERCOSUR and the EU) constitute the 3rd and 4th largest trading blocs in the world, respectively, representing between them 29% of world trade.
Thus, this agreement also has important implications for the current geostrategic landscape. In view of the trade tensions with the United States and China's advance in global influence, this pact positions the EU and MERCOSUR as key players in world trade, providing a series of geostrategic advantages for both the EU and the MERCOSUR countries.
Geostrategic advantages for the EU
“This agreement strengthens European influence in global decisions, counteracting the growing weight of the BRICS”
“The South American bloc represents an alternative market for European exports in a context of tensions with the US and competition from China”
- Strategic Access to a Key Emerging Market:
MERCOSUR, with 260 million consumers and a combined GDP of close to $2.2 trillion is one of the largest regional developing economies. In this respect, the Agreement provides for the progressive elimination of tariffs on 91% of EU exports, representing potential annual savings in customs duties of more than €4 billion for European companies.
Key European industries, such as automotive (currently facing tariffs of 35%), machinery (with tariffs between 14-20%) and pharmaceuticals (with current tariffs of 14%), will gain preferential access to these markets, increasing the competitiveness of European products against China and the US in this market.
Strengthening the EU's Global Leadership
This Agreement also provides an opportunity for the EU to strengthen its position in world trade by consolidating strategic partnerships with Latin America. In a context of growing trade tensions with the US and China's expansion, the agreement underlines Europe's ability to act as a bridge between developed and emerging economies, particularly in its relations with Brazil and Argentina (both G20 members).
Overall, this agreement strengthens Europe's influence on global decisions, counterbalancing the growing weight of the BRICS and promoting a trade order based on multilateral rules.
Strategic Response to China's Presence
Over the last decade, China has intensified its influence in Latin America, investing more than $130 billion in infrastructure, natural resources and trade agreements.
This agreement can offer a solid alternative to South American countries, allowing them to diversify their trade partners and reduce their dependence on the Asian giant.
Trade Diversification and Reduction of Dependencies
An additional geostrategic advantage of this agreement is that it reduces Europe's vulnerability to global crises by diversifying import and export sources. For example, MERCOSUR is a key supplier of strategic agricultural products (soya, beef, maize) that complement the needs of the European market.
As a result, the South American bloc currently represents an alternative destination for European exports in a context of tensions with the United States and competition from China.
Geo-strategic advantages for Mercosur countries
‘The Agreement allows Mercosur countries to position themselves as reliable and sustainable suppliers of food at a global level’.
1. Strengthening the Regional Bloc and Strategic Positioning
The EU-MERCOSUR Agreement provides a unique platform for South American countries to act as a cohesive bloc on the global stage, consolidating themselves as a relevant player in international value chains.
Diversification and stability in trade relations
Preferential access to the EU market, one of the largest economies in the world with more than 400 million consumers, allows MERCOSUR countries to diversify their trade relations, reducing their dependence on traditional partners such as China and the United States. In addition, this agreement opens the door to new market opportunities for high value-added products, especially in agro-industry, manufacturing and technological services.
Technology Transfer and Know-How
The agreement promotes technological exchange and technical cooperation in critical sectors such as renewable energy, biotechnology and digital technologies. The EU could become a key partner for Mercosur countries in the modernisation of their economies.
Consolidation as a Global Sustainable Food Supplier
The Agreement offers MERCOSUR countries the possibility to position themselves as reliable and sustainable global food suppliers. Mainly because the combination of responsible agricultural practices and compliance with European standards can strengthen their reputation in international trade, attracting both consumers and investments.
GEOSTRATEGIC POSITION OF THE MAIN MERCOSUR COUNTRIES
As a continuation of the analysis of this agreement, it is important to examine in detail the trade geopolitics and economic interests of the main signatory countries, which is key to understanding the importance of this agreement for the trade blocs involved.
Geostrategic Position of EU Countries regarding the EU-MERCOSUR Agreement
🇪🇸 Spain: A Gateway to Latin America
Interests:
Spain is one of the main promoters of the EU-Mercosur Agreement due to its close relations with Latin America. This pact is strategic both for its national interests and for European trade geopolitics. Bilateral trade between Spain and Mercosur countries currently exceeds €25 billion annually, a figure that could increase thanks to the tariff reductions agreed between the two trading blocs.
Geostrategy: Spain sees this agreement as a way to strengthen cooperation between Europe and MERCOSUR countries by acting as a ‘bridge’ between the two blocs. Moreover, its privileged position in commercial geopolitics allows it to project political and economic influence in the area.
🇫🇷 France: Between Economic Pragmatism and the Defence of its Agriculture
Interests:
France has shown reservations about the EU-Mercosur agreement, especially due to the risks it represents for its agricultural sector. At the same time, however, it also shows a high level of interest in the opportunities the agreement offers its technology and vehicle companies.
Geostrategy: France's position on the Agreement reflects its interest in strengthening its presence in trade geopolitics, countering the growing influence of powers such as China in Latin America.
🇩🇪 Germany: An Industrial and Technological Perspective
Interests:
Germany, as Europe's largest economy, is interested in the agreement mainly for the opportunities it offers to its industrial and automotive sector. Currently, trade between Germany and MERCOSUR represents more than €15 billion per year.
In fact, the elimination of 35% tariffs on European cars could generate additional revenues of up to €3 billion annually, benefiting major German car brands.
Geostrategy:
Germany seeks to use the agreement to diversify its trade relations so that it can strengthen its position as a global industrial leader on the one hand, and boost technological collaboration in clean energy, mainly renewable energy, on the other.
🇮🇹 Italy: In Search of New Export Opportunities
Interests:
Italy seeks to capitalise on the agreement to strengthen its exports of premium products, such as wines, cheeses and fashion. Currently, Italian exports to MERCOSUR exceed €4 billion annually.
The agreement could also open up opportunities for Italian companies in infrastructure and renewable energy.
Geostrategy:
Italy sees the agreement as a way to revitalise its economy and project its influence in emerging markets. On the other hand, like Spain, it also seeks to strengthen cultural ties with Latin America (especially with Argentina).
🇵🇱 Poland: Agricultural Concerns and New Opportunities
Interests:
Poland, like France, is also reticent about the Agreement because of the threat it poses to its farmers, particularly in the beef and poultry sectors.
However, the modernisation of its economy could also benefit from opportunities to export machinery and technology to Mercosur countries.
Geostrategy:
Poland perceives the agreement as an opportunity to diversify its trade outside the sphere of traditional influences, such as Germany or Russia, but insists on measures to protect its farmers from potential unfair competition.
🇳🇱 Position of the Netherlands: Promoting its role as a logistics hub.
Interests:
The Netherlands sees the EU-MERCOSUR agreement as an opportunity to strengthen its role as an important logistics and trade hub in Europe. Rotterdam, one of the world's largest ports, could benefit from increased trade between the two trading blocs.
The Dutch agricultural sector, known for its high level of technification, could find promising markets for exporting agricultural machinery, green technology and innovative products in MERCOSUR.
Geostrategy:
The Netherlands supports the Agreement as part of its traditional stance in favour of free trade, which it considers essential to maintain its global competitiveness vis-à-vis powers such as the US and China.
🇵🇹 Portugal's position: Alliance with Brazil
Interets:
Portugal has a strategic interest in the Agreement due to its historical and cultural ties with Brazil, one of the MERCOSUR member countries.
Portuguese companies in sectors such as energy and infrastructure could find new opportunities in South America, especially in projects related to renewables and construction.
Geostrategy:
Portugal supports the agreement as a way to strengthen its connection with Latin America and expand its economic influence in the region.
🇭🇺 🇨🇿 🇸🇰 Position of Eastern European Countries: Export diversification.
Interets:
Countries such as Hungary, Czech Republic, and Slovakia have less direct trade exposure with MERCOSUR, but see the agreement as an opportunity to diversify exports, especially in sectors such as technology and industrial machinery.
Geostrategy:
Eastern European countries perceive the agreement as a tool to strengthen the EU's collective influence in the world. However, they are concerned about the need to ensure a balance that does not harm their most vulnerable sectors.
The Geostrategic Position of MERCOSUR Countries vis-à-vis the EU-MERCOSUR Agreement
The EU-Mercosur Agreement has significant implications for South American countries, both in terms of economic opportunities and their position in global trade geopolitics. The specific perspectives of the main MERCOSUR members - Brazil, Argentina, Uruguay and Paraguay - are analysed below.
- 🇧🇷 Brazil: MERCOSUR's Economic Driver.
Interest: Brazil sees the agreement as an opportunity to increase its exports of agro-industrial products to the European bloc. The elimination of tariffs may allow Brazilian producers to expand their participation in international trade.
Geostrategy: From a trade geopolitics perspective, Brazil plans to use the agreement as a tool to diversify its relations, reducing dependence on traditional markets.
🇦🇷 Argentina: Balancing Agriculture and Industrial Policy
Interets:
For Argentina, the EU-Mercosur Agreement represents a boost for its agro-export sector, which is key to the Mercosur bloc's economy. However, there are challenges for industrial sectors that could face direct competition.
Geostrategy:
Argentina seeks to take advantage of this agreement as an opportunity to position itself in commercial geopolitics, fostering technology transfer and diversifying its alliances in international trade.
🇺🇾 🇵🇾 Uruguay and Paraguay: Openness and Opportunities.
Interets:
These countries, strategic members of MERCOSUR, hope to attract foreign investment and increase their presence in international trade by eliminating trade barriers between the two trade blocs.
Geostrategy::
Uruguay seeks to project itself as a bridge between South America and Europe, while Paraguay aims to consolidate its global connectivity.
🇪🇸 SPAIN: A GATEWAY TO LATIN AMERICA 🇪🇸
As mentioned above, one of the main countries most interested in the EU-Mercosur Agreement is Spain.
Therefore, to conclude this post on the EU-Mercosur Agreement, we will take a closer look at Spain's interests in this Agreement.
Spain, as one of the main players in the EU, is strategically positioned as a cultural, economic and political bridge between Europe and Latin America, thanks to which it plays an essential role in strengthening relations between the two blocs.
‘Spain's role in EU-MERCOSUR relations is not only commercial, but also geopolitical”.
- 1. Historical and Cultural Links: A Unique Relationship
Spain shares with Latin America a cultural and linguistic heritage that makes it the closest European partner to the region. This connection facilitates trade negotiations and allows Spanish companies to operate at an advantage in markets such as Brazil, Argentina, Uruguay and Paraguay. In fact, more than 90% of the population of MERCOSUR speaks Spanish or Portuguese, which gives Spanish companies a unique ability to communicate and establish relationships.
- 2. Commercial and Economic Leadership in the Region
España es el mayor inversor europeo en América Latina, con una inversión acumulada que supera los 140.000 millones €. Empresas españolas líderes en sectores como banca, energía, telecomunicaciones e infraestructura han consolidado su presencia en mercados estratégicos de MERCOSUR.
In fact, Spain has significantly increased its exports to the region in high value-added sectors such as technology, pharmaceuticals and agri-food.
- 3. A Strategic Partner in the Context of the EU-MERCOSUR Agreement
The trade agreement between the EU and MERCOSUR gives Spain a key advantage in consolidating its role as a gateway to Latin America, mainly due to several factors:
- Geographical position: Thanks to its location and its network of port infrastructures (such as the ports of Algeciras and Valencia), thanks to the Agreement; Spain can become the main entry point for MERCOSUR goods to Europe.
- Strengthening exports: With the elimination of tariffs and trade barriers, Spain is well positioned to increase its exports in strategic sectors, such as machinery, chemicals, consumer goods and renewable energies.
Therefore, Spain's role in EU-MERCOSUR relations is not only commercial, but also geopolitical. As a leader in investment, trade and innovation, Spain is consolidating its position as the natural gateway to Latin America and an essential partner for strengthening ties between the two continents.
Conclusion
The EU-Mercosur agreement not only strengthens cooperation between the trading blocs but also redefines the trade geopolitics between Europe and South America. In the context of international trade, this pact strengthens transatlantic connections, offering opportunities for economic modernisation and greater global integration for the Mercosur countries.
This agreement not only seeks economic advantages but also consolidates an alliance that can influence the rules of world trade.
AND REMEMBER...... THERE IS LIFE BEYOND TURKEY !!