What's Happening?
The European Parliament has voted to refer the EU-Mercosur trade agreement to the European Court of Justice (ECJ) for a legal opinion, potentially delaying the ratification of the agreement for over a year. The decision was made following a closely split
vote, with 334 Members of the European Parliament (MEPs) supporting the referral and 324 opposing it. The agreement, which was signed on January 17, 2026, aims to create a large free trade zone by gradually eliminating customs duties on 92% of imports from Mercosur countries over ten years, while Mercosur would phase out tariffs on 91% of EU goods over 15 years. The EU is Mercosur's second-largest trading partner, with bilateral trade in goods totaling over €111 billion in 2024. The referral to the ECJ has been met with mixed reactions, with some European farm groups supporting the move due to concerns over the agreement's impact on the agricultural sector, while others, like the European wine trade body, have criticized it for creating uncertainty for exporters.
Why It's Important?
The referral of the EU-Mercosur trade agreement to the ECJ is significant as it highlights the ongoing debate within the EU regarding trade policies and their impact on various sectors. The delay in ratification could affect businesses and industries that stand to benefit from the agreement, such as dairy, wine, and spirits producers. The decision also underscores the tension between promoting free trade and protecting domestic industries, particularly in the agricultural sector. The outcome of the ECJ's review could set a precedent for future trade agreements and influence the EU's trade relations with other regions. Additionally, the delay may impact the EU's ability to diversify its trade relations amid increasing geopolitical and economic challenges.
What's Next?
The European Court of Justice is expected to take more than 12 months to deliver its opinion on the legal basis of the EU-Mercosur trade agreement. During this period, the European Parliament will continue to scrutinize the agreement's texts. Once the ECJ delivers its opinion, the Parliament will decide whether to grant or withhold its consent for the agreement. The delay in ratification may lead to further lobbying and negotiations among stakeholders, including political leaders, businesses, and agricultural groups. The outcome of the court's review could influence the EU's approach to future trade agreements and its ability to secure and diversify trade relations with trusted partners.
