The “cows-for-cars” deal: How the EU-Mercosur Pact Rewires Influence and Access
By Olaia Mujika Anduiza, estimate reading time: 7 minutes
After more than 25 years of negotiations, the EU-Mercosur Agreement has returned to the forefront of European political and economic discussions. Supporters call it strategic, while critics label it a sellout. However, both parties are reacting to the same reality: this agreement is more than simply about tariffs, rather, it reshapes EU influence, access, and dependence.
Image source: The Conservative.
Essentials to know about Mercosur
Image source: Mercosur
WHAT: The Southern Common Market (“Mercado Común del Sur”, also known as MERCOSUR) is a regional integration process.
WHO: It was originally established by Argentina, Brazil, Paraguay and Uruguay. Venezuela and Bolivia joined later in subsequent stages, although the EU-Mercosur agreement only involves the founding countries of Mercosur.
WHY: Its main goal is to create a common space that generates trade and investment opportunities by integrating national economies competitively into the international market.
NUMBERS: 295.007.000 consumers, fifth economy in the world.
Europe did not start from zero
Long before this agreement, the EU was already embedded in the region. Spain and Portugal have long-standing historical and diplomatic ties with the region and have repeatedly tried to keep Latin America on the EU agenda, even when Brussels looked elsewhere.
Despite these years of limited institutional engagement, the economic relationship never stalled. The EU was Mercosur’s second-largest trading partner in goods, with €57 billion exported in 2024. It also accounted for a quarter of the bloc’s services trade (€29 billion in 2023) and was the largest foreign investor, with €390 billion in accumulated investment.
Hence, this deal does not open a door, it widens and institutionalises the existing one. Additionally, by removing tariff and regulatory barriers, the EU locks in access to sectors that were previously closed.
After more than 25 years, why now?
After the 1995 Interregional Cooperation Framework Agreement, the EU and Mercosur began negotiating an Association Agreement in 2002 to establish a free trade area. However, in December 2024, Commission President Ursula von der Leyen unexpectedly travelled to Uruguay (particularly, without formally notifying Member States) and struck a political deal with regional leaders on the agreement.
The timing is not coincidental; contemporary geopolitics are pushing a rethinking. Europe is not re-engaging with Mercosur because of nostalgia, but because China has already established itself in the region. In other words, losing another supply chain race is no longer an option, as diversification of Europe’s own supply base has become strategic.
What is in it for Europe?
When it comes to the economic gains, the high tariff cuts alone are worth an estimated €4 billion a year, eight times the savings of the EU-Canada deal. Also, the EU would hold trade agreements covering 95 percent of Latin America’s GDP. The US reaches only 44 percent, and China barely 14.
Other real gains go beyond tariffs: for the first time, European companies will be able to bid for government contracts in all four Mercosur countries, a space where the EU was practically absent before.
Furthermore, the deal ensures priority access to vital raw materials such as lithium, silicon, and other inputs required for batteries, processors, mobile phones, and solar power before China locks them in. This move a move goes in line with the EU’s pursuit of genuine strategic autonomy, turning it from rhetoric into practice.
Finally, the agreement would also cushion the impact of the very contentious tariffs Washington is now trying to impose on Europe.
The backlash: why “cows for cars”?
However, EU farmers see a trade-off: industrial gains for Europe in exchange for more competition from South American agriculture. Hence the nickname: “cows for cars” agreement.
Under pressure, the Commission has proposed a safeguard clause: tariff preferences could be suspended if imports push down EU market prices for products like beef, poultry or sugar. Still, producers are not convinced. AVEC (European poultry producers) calls the safeguard “illusory”, and CIBE (the sugar beet growers’ association) argues the EU should enforce equal production standards instead of relying on emergency brakes.
In addition, several environmental concerns have arisen in relation to this agreement.
Ratification: the real battlefield
The EU is now in the ratification phase of this deal, the most politically sensitive stage. The trade chapter needs approval from the Council of the EU (by qualified majority) and the European Parliament. The political and cooperation parts also need ratification by all 27 national parliaments.
In the Council of the EU, positions are visibly split:
Germany and Spain are firmly in favour, while Italy backs the deal more quietly.
Poland, Ireland and Romania are currently against the text as negotiated.
France has used its support as leverage. Macron has tied his approval to securing concessions, and appears to be getting the guarantees he wants in order to back the agreement in the Council.
Belgium made its position clear in 2024: no support without binding mirror clauses.
The Netherlands is signalling resistance, and its parliament has already passed two resolutions opposing the agreement.
In the European Parliament:
Manfred Weber, leader of the EPP, has said his group will support the agreement.
Jordan Bardella, speaking for the Patriots for Europe (PfE), has made clear they will not back it.
Unfortunately, if the “cows for cars” deal is already showing cracks (and hopes for its approval remain high) the EU–US trade agreement makes the divisions even harder to ignore. Global trade is indeed moving at geopolitical speed, but Europe remains stuck in the process.
Happened off the record…
Concerns have been raised that, up to the last minute, the Commission would not release concrete information or negotiating texts on the EU-Mercosur deal. In fact, several pages were leaked and created controversy.
In January 2024, POLITICO reported that Macron had privately texted Ursula von der Leyen to try to block the EU-Mercosur deal, which Paris opposed. Journalist Alexander Fanta later requested access to that message, but the Commission said it could not provide it because it was sent via Signal with disappearing messages enabled. European Ombudswoman Teresa Anjinho has opened an inquiry into how the Commission handled that request.
