The Haunted EU-Mercosur Agreement: Recent Developments

On January 21, 2026, the European Parliament (EP) passed a resolution requesting the opinion of the Court of Justice of the European Union (CJEU or the Court) on the compatibility of the EU-Mercosur Agreement (Agreement) with the European Union (EU) Treaties.[1] While the Agreement had been negotiated as a single treaty,[2] and specifically as a mixed association agreement,[3] subject, inter alia, to ratification by individual EU member states, the negotiated text was eventually split in two parallel treaties.[4]

In its split form, the Agreement comprises the EU-Mercosur Partnership Agreement (EMPA)[5] and the Interim Trade Agreement (ITA),[6] signed on January 16, 2026.[7] Both require EP consent before the European Council (Council) may conclude them,[8] as well as ratification by individual Mercosur countries. EMPA is further subject to ratification by individual EU member states.[9] EMPA sets the framework for multi-sectoral cooperation on political dialogue, legal affairs, climate change, and trade and investment. ITA primarily includes provisions on trade and investment, but it is intended to apply only until EMPA’s entry into force. Once in force, EMPA will effectively absorb ITA.[10] A primary objective of the Agreement is to create a free trade zone between the two regions. 

This Insight first addresses the historical background of the negotiations between the EU and Mercosur. It then briefly notes main arguments for and against the Agreement, and the political momentum which led to the Agreement being signed. The Insight further addresses the EP’s vote to refer the Agreement to the Court for a compatibility opinion. It moves on to highlight the politically problematic question of the Agreement’s provisional application before concluding with what might happen once the CJEU renders its opinion. 

Background

The EU[11] has 27 member states. The Southern Common Market (Mercado Común del Sur, or Mercosur)[12] currently has four full members: Argentina, Brazil, Paraguay and Uruguay. Efforts to establish closer commercial ties between the two regions date back to the 1990s. The EU concluded a number of bilateral agreements with individual Mercosur countries in the 1990s.[13] Negotiations, however, for a bi-regional, broad-scope trade agreement have been ongoing for the better part of the last three decades.[14]

Negotiations for an agreement on trade and political dialogue cooperation (excluding investment) were originally launched in 2000,[15] but it was not until 2016, under new pro-business administrations in Argentina and Brazil, that there was diplomatic momentum for a treaty.[16] In 2019, an agreement in principle concerning trade was reached[17] and negotiations on political cooperation were concluded in 2020.[18] In December 2024, an improved political agreement for a comprehensive partnership agreement was reached.[19] In September 2025, the European Commission (Commission) formally proposed the split of the Agreement into two parallel, legally distinct, instruments, EMPA and ITA.[20] The Council authorized their provisional application.[21] On 21 January 2026, the EP referred EMPA and ITA to the CJEU for a compatibility opinion.[22] As a result, the Council’s conclusion of the agreements, which was preconditioned on EP’s consent, is now on hold at least until the CJEU opines. EMPA is further subject to ratification by individual EU member-states. All along, the Commission had stated that its focus was more on the political processes than on the provisional application of the Agreement.[23] On February 26, 2026, it announced that it “will now proceed with provisional application,”[24] following ratification by Uruguay and Argentina a few days before. 

The Council is the highest political institution of the EU, consisting of the heads of state or government of the 27 member-states. It “defines the EU's overall political direction and priorities.”[25] One of its central functions is to officially appoint the members of the Commission, the latter being the executive branch of the EU, subject to the Council’s direction. 

Arguments for and against the Agreement

Proponents of the Agreement argue that it will boost strategic trade and political ties, support economic growth, strengthen trade competitiveness and resilience. In particular, the Agreement will promote European farming sector interests mainly by boosting EU agri-food exports while protecting EU geographical indications of origin, securing and diversifying European supply chains, and gradually eliminating Mercosur-imposed tariffs on EU exports to Mercosur countries, thus making European products significantly more competitive. [26] The Agreement also aspires to contribute to the fight against climate change and deforestation, in part through making the Paris Agreement one of its essential elements.[27] The political cooperation prong of the Agreement is further meant to promote cooperation in such fields as human rights, digital transformation, mobility, counter-terrorism, and crisis management.[28]

Opposition arguments include, among others, fears that European farming is going to suffer from unfair competition pressures, as might be caused by “import surges and/or price drops, that disrupt local produce markets.”[29] Additional objections consider consumer protection and food safety concerns,[30]underscored, in part, by the “significant regulatory differences between the EU and the Mercosur countries in relation to food production and sanitary and veterinary standards” as well as the reduction of auditing and control measures for agricultural imports from Mercosur countries.[31] These regulatory differences had been a main reason for the long negotiation over terms of trade. 

Events Leading to the Request for a CJEU Opinion

Attempting to ease European farmers’ concerns, a new Regulation (2026/687) backing additional safeguards to prevent harm to European agricultural sector, was proposed by the Commission in October 2025. The Regulation was adopted by the EP on February 12, 2026 and by the Council on March 5, 2026. At the time of this writing, its entry into force is pending.[32] This Regulation applies only to ITA, but will continue to apply once EMPA enters into force.[33]

Unfortunately, the political decision to split the Agreement into two separate treaties seems to have undermined the European public’s trust in the EU’s political and executive directorate, because the EU-Mercosur negotiations had been based on the premise that the mixed association agreement that would emerge would be subject to both EP consent and to individual EU member-state ratifications. This understanding was reflected in the original 1999 negotiating mandate that the Commission had received from the Council, and was reaffirmed in 2018.[34]

Understandably, a single agreement subject to both EP and individual EU member-states’ consent could take much longer to enter into force, if at all. Uncertainty around the global economy and conditions for international peace and security, arguably influenced the political decision to split the Agreement in two, aiming at expedited entry into force of at least its trade component. The parties’ elusive hope is that ITA will bring some sense of stability to the two regions. Hence, it was no surprise that the singing of the Agreement was hailed as a landmark.[35]

The Motions for Referral to CJEU

The motion leading to the adoption of the resolution referring EMPA and ITA to the CJEU was not the only one put to vote on January 21, 2026. At the same plenary sitting, and immediately following, the EP rejected a second motion with a similar request. Both motions were requesting a CJEU opinion on the agreements’ compatibility with EU Treaty law.[36] However, the adopted motion seeks, in rather broad terms, the Court’s opinion “on the compatibility with the Treaties of the proposed agreement and the EU’s proposed conclusion of the EMPA and the ITA, and the procedure followed,” without reference to specific provisions of the EU Treaties in its operative part. On the other hand, the rejected motion’s operative part contained questions on compatibility with both general and specific principles of EU Treaty law.[37] For instance, it referred to the precautionary principle[38] (whereas the adopted resolution only referred to it in its recitals). Similarly, it highlighted concerns about the agreements’ compatibility with other principles of EU Treaty law, including, inter alia, the competence allocation between the EU and its members, as well as with the procedural EU Treaty rules applicable to the conclusion of mixed association agreements, the common commercial policy,[39] and the general duty of consistency.[40]

The adopted motion was introduced by EP members of the Group of the “European People's Party” (Christian Democrats); the rejected motion was introduced by members of the “Patriots for Europe” Group. A “Motion of censure on the Commission by the European Parliament” regarding both agreements,[41] supported by the latter group, was rejected on January 22, 2026. These developments showcase the highly political dimension surrounding the Agreement.

Provisional Application

The immediate effect of the agreements’ referral to the CJEU is that it “freezes,” if temporarily, further steps towards their conclusion and entry into force. Since the referral, the question on the agreements’ provisional application has generated additional discussion. Assuming it is not prohibited under an agreement’s own terms, provisional application of an international agreement between the EU and a third party is permissible under EU Treaty law, and the Council may authorize it along with its signature.[42] It did so with EMPA and ITA. Each also provides for provisional application under their own terms.[43] As mentioned above, the Commission announced that it now intends to proceed with provisional application.  

However, the pending Court’s opinion and the need for EP’s consent leave room for doubt whether the Agreement may, or should, be provisionally applied as it stands. Here, both a positive CJEU outcome and a subsequent EP consent are, at best, hypothetical. Is it therefore accurate to say that the agreements’ entry into force is truly “pending” given this twofold contingency? Interestingly, the pertinent articles in the agreements carefully speak of provisional applications “before” (not “pending”) entry into force. In this light, a more appropriate question might be: is provisional application of the agreements appropriate (rather than permissible under EU Treaty law)?

Now what? Concluding Remarks

It may take at least a year for the CJEU to opine. A “green light” by the Court will mean that the EP will then have to vote on granting or withholding its consent for one or both agreements. Assuming the EP consents, EMPA will still require additional ratifications by EU member states before it may enter into force. If EP withholds consent, the Council will be barred from concluding the agreements. While it would not be the first time,[44] the Council will also find itself in the rather awkward position to have to repeal its previous decisions on the signing and the provisional application of the agreements, and to notify its Mercosur counterparties that it does not intend to become a party to the agreements. 

If the CJEU opinion is adverse, the agreements may not enter into force unless amended accordingly (or unless the EU Treaties are revised– a highly improbable scenario).[45] While, technically, it is the entry into force (not the provisional application) that is barred in the event of a finding of incompatibility, it is difficult to see how provisional application of a treaty that does not survive the Court’s scrutiny would continue to be acceptable. In any case, amending the agreements to make them compatible to the EU Treaties would necessitate new negotiations, signatures, consents – and potentially new challenges. 

In the meantime, the Agreement is likely to continue to stir heated debate and further reaction from affected sectors, as it is provisionally applied. It remains to be seen whether its overall impact will be positive or negative for the peoples and the economies of the two regions. 

About the Author: Dr. Dimitrios Dimitrakos is a California attorney specializing in public international law, with emphasis in law of the sea, law of treaties, international water law, international environmental law, international trade law, and human rights. He holds a JSD degree in international water resources law (award of excellence for highest GPA) from the University of the Pacific McGeorge School of Law. He earned his LLB from the University of Athens, and his LLM (merit) in public international law from the University of London. He researches, writes, and presents on law of the sea and other public international law topics.