The European Union and four Mercosur Countries—Argentina, Brazil, Paraguay and Uruguay—have agreed to a bilateral trade deal in principle.

Following 25 years of negotiation, the agreement creates a free-trade zone for over 700 million people across two continents. However, the deal may prove politically difficult for some countries to ratify—especially Argentina—who have threatened to pull out of the Paris Climate Agreement.

Speaking at a press conference, Ursula Von der Leyen, President of the European Commission stated, “We are sending a clear and powerful message: In an increasingly confrontational world, we demonstrate that democracies can rely on each other. This agreement is not just an economic opportunity. It is a political necessity.”

French farmers have already protested by dumping manure on streets. Sophie Primas, France’s Junior Minister for Trade, said that they will oppose ratification of the agreement.

“No, we’re not alone in our opposition to Mercosur as it stands. We can achieve a blocking minority,” says Primas.

Farmers are protesting an increase in beef, poultry and sugar imports. The EU will receive 99,000 tons of beef at 7.5% duty, this accounts for 1.6% of the region’s beef production. Poultry and sugar imports would be 1.4 and 1.2% of total imports. Mercosur exporters pay an average of 40% duty currently.

Further controversy for the deal depends on US President-elect Donald Trump’s reaction. The BRICS countries as well as Canada, the EU, Mexico and Panama have all been threatened with trade tariffs since November’s election win.

The agreement gives Mercosur countries access to the EU market and European countries a chance to diversify from potential trade conflicts involving China and the US as well as access to critical mineral deposits in Latin America.

According to the EU, European firms exported €56 billion in goods to the four Mercosur countries and €28 billion in services in 2022. The agreement still requires legal checks and translation which could take several months. Should it fail, the EU and Von der Leyen would face a tricky political future. Should all countries ratify the accord, which could take years, it could expand to investment and political cooperation.

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