EU Delays Mercosur Trade Deal After Italy and France Withhold Support

By Daniel Dawson

Jan. 5, 2026 15:59 UTC

Summary

The European Union has postponed signing its free trade deal with Mercosur until January due to opposition from Italy and France, who need more time to convince farmers to accept the agreement. The agreement, which would create the world’s largest free trade area, faces challenges from some EU member states and concerns from European farmers about competition from South American imports.

The European Union will not sign its free trade deal with the four South American countries comprising Mercosur until January, after Italy and France declined to support the agreement.

Officials in both countries said they need more time to convince farmers to accept the deal, with the French prime minister describing the agreement, already approved by Mercosur countries, as “incomplete.”

“We have reached out to our Mercosur partners and agreed to postpone slightly,” European Commission President Ursula von der Leyen wrote on social media.

The Financial Times reported that Mercosur countries accepted the delay after Italian Prime Minister Giorgia Meloni “pleaded for more time” during a phone call with Brazilian President Luiz Inácio Lula da Silva.

“Meloni explained that she is not against the agreement; she is simply experiencing some political embarrassment because of the Italian farmers, but she is confident she can convince them to accept it,” da Silva said following the call.

Rather than voting to ratify the agreement as scheduled, the European Parliament and the European Council — made up of all 27 EU trade ministers — agreed last week on binding safeguards for farmers. These include the possible reimposition of tariffs if imports surge or if prices fall by more than eight percent in a single country.

The European Commission has also sought to ease farmer concerns by proposing a multibillion-euro support fund.

After her call with the Brazilian president, Meloni’s office said Italy would be ready to sign the deal once it receives feedback from farmers on the proposed safeguards and financial support.

For ratification, the agreement must secure the backing of at least 15 member states representing 65 percent of the EU population in the European Council, along with a simple majority in the European Parliament.

Austria, France, Hungary, Italy, Ireland, the Netherlands and Poland — together representing about 45 percent of the EU population — have publicly questioned the agreement or said they would oppose it.

Because of their size, support from either Italy or France would be sufficient to push the deal over the ratification threshold.

Negotiated over 25 years, the EU-Mercosur Partnership Agreement would create the world’s largest free trade area, removing most trade barriers among 720 million people in Argentina, Brazil, Paraguay, Uruguay and the European Union.

European farmers and their advocates in Brussels, where the European Commission is headquartered, have long opposed the deal, arguing they cannot compete with tariff-free imports of beef, chicken, dairy products and grains from Argentina and Brazil.

However, European and some Argentine olive oil producers strongly support the agreement. The removal of tariffs on olive oil traded across the Atlantic would allow producers and exporters to compete more aggressively on price or capture larger margins.

While the deal is expected to have a limited effect on the European olive oil market, removing Argentina’s 31.5 percent tariff and the nine percent duties imposed by Paraguay and Uruguay on imports of extra virgin olive oil could lower costs for consumers by increasing competition.

The effects on consumers and producers of Brazil’s removal of tariffs on extra virgin olive oil at the start of 2025 have yet to become clear. Still, they may offer early insight into how the broader agreement could reshape olive oil markets in Argentina and Uruguay.

EU Delays Mercosur Trade Deal After Italy and France Withhold Support

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