EU-Mercosur Trade Agreement: Impacts on Mechanical and Plastics Industries

Trade deal EU-Mercosur deal moves forward

2026-01-11 From MA Alexander Stark 2 min Reading Time

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The long-negotiated trade agreement between the European Union and the Mercosur bloc has entered a decisive phase, with EU member states clearing the way for signature in early 2026. While political debate continues, particularly around sensitive sectors, the agreement is increasingly relevant for industrial value chains.

The EU–Mercosur agreement would establish the largest free trade zone worldwide, encompassing a combined market of roughly 700 million people.(Source: free licensed / Pixabay) — The EU–Mercosur agreement would establish the largest free trade zone worldwide, encompassing a combined market of roughly 700 million people.
(Source: free licensed / Pixabay)

As the EU–Mercosur trade agreement moves closer to signature, European mechanical engineering and plastics-related industries are intensifying calls for swift political approval, pointing to competitiveness, market access and rules-based trade as decisive factors.

The VDMA, representing Europe’s mechanical and plant engineering industry, has reiterated its strong support for the agreement. Thilo Brodtmann, Executive Director of the association, warned against further political hesitation: “25 years of negotiations are more than enough! That is why there can be no more excuses and no more delays. The EU-Council of Ministers must act now and give its approval to the Mercosur Agreement.”

From an industrial perspective, the agreement directly addresses one of the sector’s key structural disadvantages in South American markets: high import duties on machinery, production equipment and industrial systems. According to Brodtmann, “The Free Trade Agreement between the EU and the Mercosur countries is of utmost importance for the competitiveness of European industry and mechanical engineering. Currently, the tariff burden on Mercosur countries is 11 percent, which represents a significant cost burden for our companies.”

For plastics production and processing industries, the implications are closely linked to machinery and tooling exports. Lower tariffs on injection moulding machines, extrusion lines, automation systems and high-precision moulds would improve the business case for European suppliers and support investment in modern plastics manufacturing capacity across Mercosur countries. Industry observers expect indirect effects in packaging, automotive plastics, technical components and consumer goods, where European process know-how and energy-efficient production technologies are in demand.

Beyond cost factors, the agreement is also seen as strategically relevant in the current global trade environment. “The Mercosur agreement would also send a much-needed signal in favor of rules-based trade. And our South American partners will not wait forever for a decision,” Brodtmann said, highlighting the geopolitical dimension for export-oriented industries.

While the agreement’s implementation will be phased over several years, mechanical engineering and plastics-related sectors view the current phase as critical. For many companies, early clarity on ratification timelines is essential for planning investments, local partnerships and long-term market strategies in South America.

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