The European Union has taken a major step toward finalising its biggest trade deal to date, the EU-Mercosur partnership agreement (EMPA).

On Wednesday, September 3, the European Commission formally submitted proposals to the Council of the European Union for the signing and conclusion of the agreement, which was politically agreed with Mercosur's four founding members, Argentina, Brazil, Paraguay, and Uruguay, in December 2024. But while the European Commission emphasises the opportunities at hand, the path ahead towards the final ratification is far from smooth.

What is at stake?

Mercosur, short for Mercado Común del Sur or Southern Common Market, is South America's largest trading bloc. Together, the EU and Mercosur represent a market of more than 720m people and nearly a quarter of global GDP.

The deal has been 25 years in the making, with negotiations often stalling intermittently regarding mismatched ambitions concerning the agricultural sector.

Its central aim is to cut tariffs, boost trade and investment, and open up markets on both sides.

Over the next decade, Mercosur will phase out import duties on 91% of goods from the EU, a major win for industries such as cars, machinery, chemicals, and pharmaceuticals. Irish firms also have skin in the game as 83 Irish companies currently export to Mercosur.

For food producers, the deal opens new markets for European wines, chocolates, and dairy. However, the sticking point remains beef. Mercosur will be allowed to export 99,000 tonnes of beef into the EU at a preferential tariff of 7.5%, the largest beef quota the EU has ever granted.

The Irish dilemma

This quota has Irish beef farmers on high alert, with the Irish Farmers' Association and the Irish Cattle and Sheep Farmers' Association remaining strongly opposed. Normally, tariffs on imported beef are 40-45%. Farmers fear cheaper imports will undercut EU producers and drive down prices.

Yet some experts argue the actual impact on beef prices could be modest. It has been pointed out that Mercosur already exports to Europe under different quotas and out-of-quota arrangements. Much of the new quota may simply replace existing "over-quota" trade, adding only around 10,000 tonnes of fresh beef above current levels.

Even so, the Irish Government remains concerned regarding the trade agreement and its impact on the Irish beef industry.

Safeguards

To calm farmer concerns, the European Commission has promised protections. A new "unity safety net" worth €6.3bn will be available to support farmers during market shocks, effectively doubling the current EU agricultural reserve. The deal also includes bilateral safeguards, allowing temporary protective measures if imports threaten EU industries.

On sustainability, the text contains enforceable commitments to the Paris Climate Agreement and anti-deforestation measures. But environmental groups remain unconvinced. Greenpeace and Friends of the Earth say the agreement will accelerate deforestation in Brazil and fuel the climate crisis.

Indigenous leaders in South America have also criticised the process, citing threats to land rights and biodiversity. Animal welfare groups argue that the EU has not gone far enough to ensure imported beef meets European standards.

Split ratification

One crucial detail is how the deal will be ratified. The Commission confirmed that EMPA will be split into two agreements.

The trade component will form an interim EU-only agreement (iTA), while the broader political and co-operation elements will be a "mixed agreement".

This distinction matters. Because trade is an area of EU competence, the iTA does not require unanimous backing from all national governments. Instead, it can be ratified more quickly at EU level by the council and the European Parliament. By contrast, the mixed agreement, covering political dialogue and co-operation, must not only pass the council and parliament, but also win ratification in every member state, including Ireland.

Geopolitical backdrop

Beyond farming, the deal has a geopolitical dimension. With Donald Trump back in the White House and tariffs of 15% imposed on EU imports, Brussels is eager to diversify trade partnerships. China's growing influence in South America has also spurred the EU to strengthen ties with Mercosur. In many ways, the agreement is Europe's attempt to prove that the rules-based trade order can survive turbulence from Washington.

What happens next?

Ratification will be politically fraught. Even though the iTA avoids unanimity, at least 15 member states representing 65% of the EU population must still back it under qualified majority voting. France, Poland, Italy, the Netherlands, Austria, and Ireland have all voiced opposition or serious concerns.

Additionally, the iTA will require a simple majority of MEPs in the European Parliament, where the deal remains very controversial among certain MEPs.

To use a farming metaphor, we've only just ploughed the field -- the deal is far from done.

The EU-Mercosur deal: Next steps for trade agreement