EU trade deal sparks quota tug-of-war inside Mercosur bloc

Mercosur countries remain at odds over how to divide low- or zero-tariff exports to the EU under their newly implemented trade agreement.

Under the EU–Mercosur trade deal, provisionally in force since 1 May, Argentina, Brazil, Paraguay and Uruguay can export set quantities of agri-food products to the EU at preferential tariff rates.

But the four countries have yet to agree on how to split those quotas and are currently relying on a first-come, first-served system.

The issue dominated the Mercosur leaders’ summit, which wrapped up on Tuesday in Asunción, Paraguay. Hosted by Paraguayan President Santiago Peña, the meeting was attended by Brazil’s Luiz Inácio Lula da Silva and Uruguay’s Yamandú Orsi, while Argentine President Javier Milei was notably absent.

Peña is emerging as the strongest critic of what he sees as a deeply unequal arrangement. Paraguay, which held the bloc’s rotating presidency until July, had pushed to divide the quotas equally among the four members, a proposal rejected by its partners.

“Paraguay has been left with a bitter taste after the implementation of that agreement,” Peña said.

He argued Paraguay is disadvantaged when competing with economic heavyweights Brazil and Argentina and called for a fairer solution.

“Without justice there can be no Mercosur, there can be no integration, there can be no genuine friendship between us,” Peña told his counterparts, adding that the deal is key to Paraguay’s economic development.

The debate has exposed divisions within the bloc.

In the first months of the agreement, Uruguay used more than 60% of its rice quota in less than a month, while Argentina took up 80% of the available honey quantities for the deal’s first three months.

According to Datamar’s containerized cargo data, Uruguay exported 261 TEUs of rice to the European Union in May 2026, the first month in which the agreement with the bloc allowed shipments to move duty-free. In the year to date, exports totaled 1,381 TEUs. The chart below shows the history of Uruguay’s rice exports to the European bloc:

Rice Exports | Uruguay – European Union | Jan 2023 – May 2026 | TEUs

Source: DataLiner (click here to request a demo)

Brazil, the region’s agri-food powerhouse and a major beef exporter, wants quotas distributed according to each country’s share of global trade. Argentina and Uruguay favour an allocation based on their historical average exports to the EU, two people involved in the talks said.

Uruguay, which took over the bloc’s rotating presidency on Tuesday, will now lead the negotiations through the end of the year.

On the EU side, quota allocation has also become controversial, with agri-food industry groups warning of a loophole in the text that allows Mercosur governments to decide unilaterally which companies can export to the bloc.

Source: Euractiv 

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