The EU-Mercosur agreement could reshape not only transatlantic relations, but the economic map of Latin America itself. After a quarter-century of stop-go negotiations, Brussels and the four Mercosur states — Argentina, Brazil, Paraguay and Uruguay — finally have an agreement on the table that slashes more than 90 percent of tariffs, reins in non-tariff barriers, locks in sustainable-development commitments and contains other provisions that reach well beyond trade in goods.
But signing on the dotted line is only the first step.
The agreement needs to be ratified by the Council of the European Union, the European Parliament, and parliaments in Buenos Aires, Brasilia, Asunción, and Montevideo.
The question for policymakers, businesses, and civil-society leaders on both sides of the Atlantic is not simply 'if' the deal will pass, but 'where' it could lead next: could this agreement become the springboard for a transatlantic EU-Latin America bloc?
If the EU-Mercosur agreement is ratified, the EU will have FTAs with 95 percent of Latin America's GDP, compared to just 44 percent for the US and 14 percent for China.
Yet those numbers tell only part of the story.
The EU-Mercosur agreement can be the foundation for something far more ambitious: an interconnected web of trade agreements that bind together the existing FTAs — from north to south of the region — between the EU and Mexico, Central America, the Caribbean, Colombia, Peru, Ecuador and Chile and — hopefully soon — Mercosur itself.
Very pragmatic-high impact mechanisms to make FTAs interoperable are through extended or diagonal cumulation of rules of origin and Mutual Recognition Agreements (MRAs).
Diagonal cumulation, provided for in several EU-LAC agreements, allows for the recognition of third country inputs as originating if the conditions set out in the agreement are met.
Thus, inputs from anywhere in that network would count as domestic content, enabling a Brazilian manufacturer to use Mexican parts and still qualify for zero tariffs in Hamburg.
Moreover, MRAs on testing, certification and technical regulations could blur regulatory borders, forging a single, high-standards market stretching from Lisbon to Lima.
The adoption of such mechanisms would represent a strategic step towards an integrated bloc between the EU and Latin America.
According to recent estimates, a fully-integrated economic space could increase trade between the two regions by up to 70 percent and intra-regional trade by 40 percent. This would allow the EU to achieve, apart from México, the relevance of the US and China as a trade partner.
Both tools are technical, almost dull. Yet they speak to a deeper strategic imperative: creating an economic bloc of 1.1 billion people whose combined GDP rivals that of the US.
By interconnecting the existing network of FTAs, Europe and Latin America can build an integrated bloc of sustainable, high-value industries, where the greatest strategic opportunity lies in facilitating the bi-regional integration of the industrial sectors involved in the green-digital transition.
Latin America is rich in critical minerals and renewable energies, the EU rich in capital, technology and know-how that could spur a new wave of European investment in the region.
Yes, geopolitics matter. Yet the deeper promise goes beyond balancing Beijing or Washington. The ratification of EU-Mercosur pact sends a signal that Europe remains open for business, with a partner committed to a rules-based trading system, sustainable development, and shared values, all while fostering economic progress and deepening Latin America’s own intraregional market.
For Brussels, the path is clear: ratify the EU-Mercosur agreement, then deploy technical negotiations on cumulation of origin and MRAs to weave the wider FTA network.
For Latin America’s capitals, the task is equally vital: treat bilateral deals not as endpoints, but as stepping-stones toward region-wide integration at EU standards.
If leaders on both sides rise to the challenge, this will not be 'just another trade deal.' It will mark the dawn of a new transatlantic era in which the EU and Latin America stand shoulder to shoulder as partners in a single, sustainable, rules-based, economic project. The time is right. The moment is now.
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Ernesto Talvi is an economist and former Uruguay foreign minister.
Ernesto Talvi is an economist and former Uruguay foreign minister.