The European Parliament agreed this Wednesday (21) to take the trade agreement between the European Union and Mercosur to the European courts so that there can be a conclusion on its legality, a decision that suspends the implementation of the pact, despite the signing taking place last Saturday in Paraguay.
Twenty-five years after negotiations began, the path to an agreement seemed clear after the 27 Member States authorized European Commission President Ursula von der Leyen to travel to Asunción to sign it, but the reluctance of the European Parliament – in a decision narrow by just ten votes – once again complicates the implementation of the pact.
Can the agreement be implemented?
The European Parliament cannot ratify the pact until the EU Court of Justice has ruled, but, legally, the European Commission is not obliged to wait for the European Parliament and could begin to apply it provisionally, as soon as it is signed in Paraguay.
The only requirement for its implementation is ratification by one of the Mercosur countries, which has not yet occurred. As soon as Brazil, Argentina, Uruguay or Paraguay ratify it, the agreement can begin to be implemented between the EU and the Latin American countries that have ratified it.
However, given the political differences that the agreement generates between EU countries, the Commission prefers to wait and see if it obtains approval from European leaders to implement the pact after rejection by the European Parliament.
Brussels expects the Heads of State and Government to discuss the matter this Thursday (22) at the extraordinary summit to be held in the EU capital, initially called to discuss relations with the USA after the conflict in Greenland.
Why is the European Parliament turning to the courts?
This is a political decision that has received support from the Greens, the European Left and right-wing groups, as well as some MEPs from the European People’s Party (mainly Polish ones) and French representatives from all groups. Everyone questions the legality of the agreement.
Specifically, the rebalancing mechanism allows EU or Mercosur countries to request compensation from the other party if they consider that any laws passed in the future contradict the agreement. MEPs fear that this clause limits European sovereignty.
They also question the legal basis that allows the ratification of the commercial part of the agreement without the consent of the parliaments of EU countries.
Brussels rejects the arguments
The Commission states that the rebalancing mechanism does not restrict the EU’s regulatory capacity, because no arbitral tribunal can force either party to change its laws.
Brussels states that the arbitration court agreed between the EU and Mercosur is based on those provided for in the World Trade Organization and emphasizes that it is also included in the agreement that the Commission signed with Chile, in force since February 1, 2025.
Still, “the Commission will engage with MEPs and the EU Council before deciding on next steps,” said Commerce spokesman Olof Gill.
The Court of Justice of the European Union (CJEU) could take between 18 and 24 months to issue its decision.
