Outdated CareBear Geopolitics

The EU-Mercosur agreement seems like a swan song for the 1990’s “End of History optimism” corresponding to the heydays of globalisation, at a time when Europe claims to be entering the era of geopolitics. That is the problem: the tool is no longer up to the task.

Revealing obstacles
On 21 January, the European Parliament adopted a resolution to refer the EU-Mercosur agreement to the Court of Justice of the European Union (CJEU) for a ruling on its compliance with European treaties. Until the Court has issued its opinion, MEPs have pledged not to ratify the text, effectively blocking its full entry into force.
The vote was won by a very narrow majority (334 votes in favour, 324 against, 11 abstentions), reflecting a deep divide between those who want to save the EU’s trade credibility at all costs and those who demand that it finally be brought into line with its climate, social and democratic commitments.
The referral to the CJEU concerns three major points. The first questions the legal compatibility of the division between an ‘interim trade agreement’ and a ‘comprehensive agreement’ when the initial mandate of 1999 referred to a single text covering both trade and political dialogue and cooperation. This point is only formal in appearance, as it is thanks to this split that the trade agreement could enter into force by simple ratification at European level (by a qualified majority in the Council and a simple majority in the Parliament) and by a single Mercosur country, whereas a ‘comprehensive agreement’ requires ratification by all the Member States concerned – a process that would undoubtedly run into difficulties in France (and possibly Ireland or Hungary), where there is unanimous opposition to the agreement.
The second point of referral naturally questions the compatibility of the agreement with the sustainability objectives of European policies, as highlighted by observers on the left and among environmentalists, particularly in the European Parliament. But above all, it is the third point that is causing concern. The agreement provides for a particular type of arbitration mechanism between the parties. This provision raises fears among European legislators that Mercosur countries could challenge future EU public policy choices on the grounds of ‘damage to the commercial interests’ of the signatories. More specifically, if a measure taken by one party ‘substantially’ compromises the expected trade benefits, the other party is entitled to request ad hoc arbitration and obtain monetary compensation or the reinstatement of customs duties, without having to prove the violation. This type of permanent panel claims to balance trade relations in the long term, but its main effect is to threaten the scope of European regulatory power, particularly on deforestation, a subject on which President Lula maintains an ambivalent position, promising an end to illegal deforestation by 2030 while denouncing the European regulation on imported deforestation as a protectionist measure. In any case, these arbitration mechanisms are a recurring feature of ‘new generation’ trade agreements, which had already scuppered the TAFTA with the United States (TTIP) and threatened the ratification of CETA, suspended for nearly a year due to the Walloon Parliament’s refusal.

An industrial agreement above all
On paper, however, the agreement is promising. It is one of the largest ever concluded by the EU, covering a market of more than 700 million people and removing almost all customs duties between the EU and Argentina, Brazil, Paraguay and Uruguay. For European exporters, it opens up Mercosur’s industrial and services markets; for South American countries, it secures access to a solvent market for their raw materials and agri-food products.
However, on this subject, the place of agriculture in the architecture of the agreement, so central to the French debate, remains quantitatively limited. The concessions mainly concern a few sensitive sectors (beef, poultry, sugar, ethanol and honey), which are subject to tariff quotas and bilateral safeguard clauses in the event of a ‘threat of serious damage’ to a European sector. These are clauses that the Mercosur countries do not seem very enthusiastic about ratifying.
For poultry, according to European Commission figures, the 180,000-tonne duty-free quota represents around 1.3% of European production, which is less than current imports from Mercosur (nearly 293,000 tonnes), and should broadly accompany the expected increase in consumption rather than destabilise it.In terms of ethanol, the 450,000 tonnes at zero duty (chemicals) and 200,000 tonnes at reduced duty (fuel) must be compared with an annual European consumption of 6 million tonnes, including 4 million tonnes for fuels. There is undoubtedly a real sectoral shock, particularly for certain French livestock and beet-growing areas, but it is nothing like the scenarios of ‘invasion’ or ‘abandonment’ brandished in public debate by representatives of the agro-industry.
Most of the available impact studies agree: yes, some beef, poultry and sugar producers may see their margins squeezed if prices fall, but the aggregate effects on European agriculture remain modest, while European industry and services are the big winners. It is the traumatic memory of French rural crises, rather than the actual volumes involved, that is fuelling the campaign to transform this broadly industrial agreement into a symbol of the abandonment of the farming world. It is an understatement to say that non-ratification of the agreement would do nothing to change the situation of the French agricultural crisis, whose problems stem from much further back.

Ghost of a bygone era
This does not mean that it is a good trade agreement. Ultimately, the real problem with the EU-Mercosur agreement is less what it does to European farmers than what it says about Europe in this quarter of a century. Initiated at the end of the last century, it bears all the hallmarks of the political and ideological thinking of the 1990s: widespread reduction of customs duties, reciprocal opening of markets, minimal regulation of public aid, as if the ‘Washington Consensus’ had never been challenged by financial, climate and geopolitical crises.
Yet in 2026, the United States is unapologetically pursuing a massive industrial policy, from Biden’s Inflation Reduction Act to subsidies for semiconductors and Trump’s tariff wars. For its part, China has long structured its value chains around an unapologetic and highly subsidised state capitalism. And the BRICS countries, including Brazil and Argentina, are challenging the hegemony of the dollar and the geo-economic and geopolitical dominance of the West. But the European Union continues to negotiate major trade agreements in the old-fashioned way, limiting its room for manoeuvre in terms of subsidies, local preferences and strong environmental conditionality, even as it proclaims ‘open strategic autonomy’ and claims to be developing a sustainable industrial policy.
The EU-Mercosur agreement is a perfect illustration of this: by locking in competition and liberalisation rules for the long term, it freezes a model in which trade remains the main vector of economic influence, when our era calls for coordinated strategies on investment, standards and technologies. In short, this agreement does little to protect Europe’s ability to plan its essential supply chains (critical raw materials, green technologies, defence) and instead consolidates an old reflex: gaining market share rather than rebuilding productive power.

CareBears geopolitics
The EU is right to want to have a presence in South America, to not leave Donald Trump and China with a monopoly on influence in Brazil or Argentina. It is right to want to set democratic, environmental and social standards with these partners that are higher than those offered by Beijing or Washington.
But it is going about it the wrong way if it continues to treat geopolitics as an afterthought to its trade policy, rather than as the framework for an integrated industrial and climate strategy. An agreement such as Mercosur, even if accompanied by a strengthened sustainable development chapter, is no longer enough. What the EU needs are partnerships focused on value chains (hydrogen, batteries, sustainable agriculture), linked to a proactive European industrial policy that includes protection for the most strategic sectors.
Pending a ruling from the CJEU, the EU-Mercosur agreement thus appears to be a relic: neither quite of the past, nor really of the future. It is up to Europe to decide whether to make it the culmination of old-style globalisation or the starting point for a new narrative in which trade finally serves public power, and not the other way around.