Mercosur-EU Trade Agreement Sets Winners and Losers in Argentina, Boosting Agroindustry and Energy Sectors

Argentina’s trade with the EU currently shows a persistent deficit, with exports mostly comprising soy derivatives, aluminum, and meat, while imports focus on industrial supplies and capital goods from major EU economies like Germany, Italy, and Spain. The agreement will remove 92% of tariffs on Mercosur exports and provide preferential quotas for the remainder. Agricultural barriers will be lifted on a broad range, including fruits, vegetables, oils, wines, and key Mercosur commodities such as soy, coffee, and mate, potentially recovering up to $600 million by boosting exports of biodiesel, oils, shrimp, and citrus.

Agroindustry is positioned as a primary beneficiary, with soy, grains, meats, wines, and biodiesel seeing expanded access to European markets. The energy sector may also grow its influence as the EU seeks to diversify energy sources away from Russia, positioning Argentina as a reliable supplier rather than an agricultural competitor. Additionally, knowledge-based service industries are expected to support European technological demand.

Industrial sectors with low competitiveness, notably small and medium enterprises in white goods and metalworking, will confront pressure and require significant restructuring supported by macroeconomic reforms, inflation control, exchange rate stability, and improved credit access. The automotive industry will experience a gradual tariff phase-out over the next decade, softening immediate impact. Experts highlight that progressive tariff reductions staggered over 5 to 15 years in sensitive sectors mitigate risks of outright losses.

The agreement also enhances regulatory frameworks for investment and intellectual property enforcement, crucial for improving Argentina’s legal certainty. The deal is seen as a strategic move to attract investments and deepen economic integration with high-income markets, despite ongoing challenges for certain industrial players.