In a stunning blow to free trade ambitions, the European Parliament has thrown the EU-Mercosur agreement into legal limbo, prompting sharp criticism from German Chancellor Olaf Scholz. The deal, inked just days ago with South America’s powerhouse bloc including Brazil and Argentina, promised to slash tariffs and boost global commerce.
Ursula von der Leyen, President of the European Commission, had championed the pact at the World Economic Forum in Davos, hailing it as a landmark for international trade. Spanning years of negotiations, the agreement aims to dismantle barriers between the EU and Mercosur nations—Brazil, Argentina, Uruguay, and Paraguay—potentially unlocking billions in economic growth.
But on Wednesday in Strasbourg, MEPs voted 334-324 to refer the deal to the European Court of Justice, questioning its compatibility with EU policies. The move came amid fierce protests from European farmers, who fear an influx of cheaper South American agricultural imports could devastate local livelihoods. Hundreds of tractors encircled the parliament building, and cheers erupted as the vote passed.
Chancellor Scholz did not mince words. ‘The European Parliament’s decision on the Mercosur agreement is regrettable,’ he stated. ‘It fails to grasp the geopolitical realities. We have full confidence in the deal’s validity. No more delays—implement it provisionally now.’
The chancellor’s frustration underscores a broader rift within Europe. While proponents see the pact as vital for diversifying supply chains post-Ukraine war, critics warn of environmental risks and unfair competition. As the Court of Justice deliberates, the future of this mega-trade deal hangs in balance, testing the EU’s commitment to open markets in turbulent times.