The quantifiable gains from the Free Trade Agreement between the European Union
and Mercosur – Argentina, Brazil, Paraguay and Uruguay – are small on account of the
small share of EU trade with Mercosur and the relatively modest ambitions of the deal in
terms of liberalising agriculture in the EU and manufacturing in Mercosur. Nevertheless,
the agreement, if ratified and accompanied by reforms that strengthen competitiveness,
could represent a major departure for Mercosur, pushing it towards an outward-oriented
development strategy. The deal could also mark a significant step forward for the EU in its
efforts to reform agriculture. The agreement faces a difficult ratification process, but is worth
having and fighting for. Incorporating mechanisms to deal with environmental, especially
deforestation, concerns will be particularly important. The agreement constitutes an
insurance policy against further deterioration in the rules-based multilateral trading system
