EU-Mercosur deal likely to take effect provisionally from March, says EU diplomat

The EU’s free trade deal with South American countries will probably be applied on a provisional basis as soon as March, an EU diplomat told Reuters on Thursday, despite a looming challenge at the bloc’s top court.

EU lawmakers dealt a blow to the contentious trade agreement with Brazil, Argentina, Paraguay and Uruguay on Wednesday by referring it to the European Court of Justice, potentially delaying it by two years.

“The EU-Mercosur agreement shall be applied provisionally once the first Mercosur country has ratified it,” an EU diplomat told Reuters.

“That will probably be Paraguay in March,” the diplomat added.

The EU signed its largest-ever trade pact with the Mercosur members on Saturday after 25 years of negotiations, and the delay has caused dismay among many businesses in Germany and with one of its main backers, Chancellor Friedrich Merz.

He told delegates at the World Economic Forum in the Swiss alpine resort of Davos that he regretted the decision by the European Parliament, which meant another obstacle had been erected.

“But rest assured: We will not be stopped. The Mercosur deal is fair and balanced. There is no alternative to it if we want to have higher growth in Europe,” he said on Thursday.

Supporters argue that the deal is important to offset business lost to US tariffs and to reduce reliance on China.

Critics, led by France, say it will increase imports of cheap beef, sugar and poultry and undercut domestic farmers.