After 25 years of negotiations, postponements and crossed vetoes, the free trade agreement between the European Union and Mercosur has entered its decisive phase. On 9 January Coreper, the committee of permanent representatives of the 27 member states, gave the political green light to the agreement. What also made the difference was Italy’s change of position, which sided with the favorable countries, allowing the necessary qualified majority to be achieved.
A passage that is anything but neutral. While on the one hand the agreement is presented as an economic opportunity, on the other hand it raises new and serious environmental concerns, in particular regarding the import of fertilizers produced with lower environmental standards than those in Europe.
But let’s take a step back for a moment and try to understand what Mercosur is and why the EU considers it strategic.
What is Mercosur
Mercosur (Mercado Común del Sur) was born in 1991 with the Treaty of Asunción and brings together Argentina, Brazil, Paraguay and Uruguay with the aim of promoting regional economic integration. The project envisages the creation of a customs union, with common external tariffs, and aims in the long term at the construction of a real common market on the European model, based on the free movement of goods.
Over the years, Mercosur has become one of the main economic blocs in Latin America, representing an area rich in raw materials, energy resources and strategic agricultural production, as well as an expanding market for industrial goods and services.
The agreement with the European Union, politically concluded in December 2024 after more than two decades of negotiations, aims to further strengthen these ties, creating one of the largest free trade areas in the world, with more than 700 million people involved.
The text provides for the progressive elimination of duties on 91% of trade between the two blocs, marking a key step in economic relations between Europe and Latin America.
The fertilizer question
For the European industry the agreement represents a deal: fewer duties on cars, machinery, chemical and pharmaceutical products, currently burdened by tariffs that in some cases exceed 30%. According to the European Commission, the overall savings in duties would amount to around 4 billion euros per year.
Even for Italy, which has trade worth around 14 billion euros with Mercosur, the agreement is presented as an opportunity for growth. But the center of gravity of the debate shifts rapidly when we enter the field of agriculture and the environment.
The agricultural sector has always been the most controversial point of Mercosur. In addition to additional quotas for meat, poultry, sugar and ethanol, the agreement reopened a less discussed but central issue: the import of fertilizers.
Mercosur countries are large producers and exporters of nitrogen and chemical fertilizers, often made with highly energy-intensive processes, high CO₂ emissions, less stringent environmental rules and controls than in the EU. This allows for lower prices, but at the expense of environmental impact.
To avoid unfair competition, the European Union introduced the Cbam (Carbon Border Adjustment Mechanism), the mechanism that taxes imports with a high carbon footprint. Fertilizers are among the most sensitive sectors.
And this is where Italy’s change in position comes into play. To support the Mercosur agreement, the government has called for attenuations, postponements or reductions in the impact of Cbam on fertilizers, arguing the need to protect European farmers from rising costs.
The potential result is a paradox: more pollutingly produced fertilizers could enter the European market with fewer barriers, while EU producers continue to incur high costs to meet stricter environmental standards.
According to NGOs and environmental associations, this choice risks weakening the credibility of European climate policies, moving pollution outside the EU borders without actually reducing it and encouraging an agricultural model more dependent on chemical inputs.
In other words, there is a risk of externalizing the environmental impact, importing products that Europe discourages or regulates internally.
The protests of the agricultural world
It is not surprising that the protests in the agricultural world have not stopped. In several countries, tractors have returned to the streets against an agreement perceived as unbalanced, incapable of guaranteeing fair prices, real environmental protections and fair competition.
The European Commission promises safeguards, early CAP funds and tighter controls. But for many farmers and environmentalists the problem remains structural: we cannot talk about an ecological transition if free trade rewards more polluting production.
Sources: AP news / Reuters
