Mercosur trade deal: What Irish SMEs need to know

Explainer: The EU’s landmark pact with South America promises tariff cuts, supply chain resilience and fresh export opportunities – but Irish SMEs must weigh benefits against new competitive pressures

The European Union has taken a decisive step toward ratifying its long-awaited trade agreement with Mercosur – the South American bloc comprising Brazil, Argentina, Uruguay, and Paraguay.

After years of negotiation and political wrangling, EU governments have now approved the landmark deal, which will move to the European Parliament for final consideration.

For Irish SMEs, this agreement could reshape export strategies, supply chains, and competitive dynamics. Here’s what you need to know.

What is the Mercosur Trade Deal?

The EU–Mercosur agreement is one of the most ambitious trade pacts ever negotiated by the EU. It aims to:

• Eliminate tariffs on over 90% of goods traded between the EU and Mercosur.
• Open services markets, including digital and financial services.
• Protect investments and intellectual property, giving businesses greater legal certainty.
• Include sustainability safeguards, addressing concerns about deforestation and environmental standards.

The deal covers a market of 280 million consumers and represents a combined GDP of over €2 trillion. For context, Mercosur is the EU’s 11th largest trading partner, but this agreement could significantly deepen ties.

Irish Government opposition

Ireland opposed the Mercosur deal largely due to concerns from its agricultural sector, especially beef producers. The Government feared that tariff-free quotas for South American beef could undercut Irish farmers and depress prices. There were also doubts about whether Mercosur countries could meet EU standards on food safety, animal welfare, and environmental protections.

These issues were amplified by strong lobbying from farming organisations and a Programme for Government commitment to block the agreement until enforceable safeguards were in place. The opposition reflected a broader push to protect Ireland’s agri-food sector from competitive pressures and maintain high regulatory standards.

Key benefits for SMEs

• New export markets: Irish agri-food producers, particularly beef, dairy, and processed foods, will gain improved access to South America.
• Diversified supply chains: Reduced tariffs on raw materials and industrial goods can help manufacturers lower costs and reduce reliance on traditional markets.
• Resilience against geopolitical shocks: With global trade facing uncertainty, this agreement offers stability and predictability.

Why does it matter for Irish businesses?

Ian Talbot, CEO, Chambers Ireland

According to Chambers Ireland, the deal is a “great opportunity for the Irish economy” and a boost for free, open trade – a cornerstone of Ireland’s economic success.

Ian Talbot, chief executive of Chambers Ireland, emphasised the strategic value of the deal.

“The approval of the Mercosur agreement marks a decisive moment for Irish and EU businesses. It will help stabilise the trade environment and build much-needed resilience into our supply chains. In a time of ongoing geopolitical instability and the lingering effects of tariffs, this agreement will help reduce vulnerabilities and create new opportunities for Irish exporters. Protection of investments and Intellectual Property are also important elements.”

“Forging strong partnerships with key markets is the cornerstone of the EU’s free trade agenda. The success of the EU-Canada (CETA) agreement has already shown how new Free Trade Agreements can open up new supply chains for critical raw materials and reduce our reliance on traditional markets. The Mercosur agreement, given the size and scale of the market involved, will deliver even greater benefits – including for Ireland’s agri-food sector, which now has improved access to up to 280 million new consumers.”

Talbot said that implementation of this new agreement must be properly executed, and the EU and Member States must ensure that the safeguards negotiated to protect important agricultural sectors are monitored and rigorously applied.

“The approval of the EU–Mercosur agreement sends a powerful message to global markets that the EU remains committed to open trade and is capable of delivering ambitious agreements.

“This progress reinforces confidence among other major economies currently engaged with the EU – such as Indonesia, India, Malaysia, the Philippines, and the UAE – that Europe is serious about advancing free and fair trade. Ireland must play its part in delivering on this message for future trade agreements,” Talbot said.

Lessons from CETA: A preview of potential gains

The EU–Canada agreement (CETA) offers a useful benchmark. Since its provisional application in 2017:

• Irish exports to Canada grew 355%, from €891m in 2016 to €4bn in 2024.
• Cheese exports surged 383%, baked goods by 2,582%, and whiskey by 99%.
• Meat exports rose 400%, peaking at €40m in 2022.

If Mercosur delivers similar results, Irish SMEs in food, drink, and manufacturing could see transformative growth.

What are the risks?

While the deal promises opportunity, it also raises concerns:

• Agricultural competition: South American beef imports could pressure Irish farmers. The EU has negotiated safeguards, but monitoring will be critical.
• Compliance costs: SMEs must adapt to new rules on sustainability and traceability.
• Political uncertainty: Ratification by the European Parliament is not guaranteed, and implementation will take time.

Next Steps for SMEs

1. Assess market potential: Identify Mercosur countries where your products or services have demand.
2. Review supply chain strategy: Explore sourcing opportunities for raw materials or components.
3. Prepare for compliance: Understand environmental and IP protections embedded in the deal.
4. Engage with trade bodies: Chambers Ireland and ICC Ireland will provide guidance and resources.

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