The European Union and four South American countries on Friday finalised a free trade agreement that took over two decades to negotiate.
Before implementation, however, the accord faces a key test in Europe amid initial resistance from Ireland, France and some other EU members.
What is the Mercosur trade deal?
Mercosur is a trade bloc of four South American countries: Argentina, Brazil, Paraguay and Uruguay.
The trade deal with the bloc would be the EU's largest in terms of the population of its partner and in terms of tariff reductions, which could amount to €4 billion annually, phased out over several years.
It is also the biggest deal for Mercosur, which has trade agreements with Egypt and Israel and has signed one with Singapore. The EU sees this as giving it an early-mover advantage.
It covers industrial goods, agricultural products, raw materials and services, and contains sustainability clauses.
What is the detail on agricultural products?
The EU will liberalise 82 per cent of Mercosur agricultural imports and Mercosur will remove tariffs on 93 per cent of tariff lines for EU exports. For some products, tariff-rate quotas will apply.
The EU will phase in over five years a 99,000-metric-ton quota of beef, with a 7.5 per cent duty. This represents 1.6 per cent of overall EU beef consumption per year. The EU already imports annually about 200,000 tons of beef from Mercosur.
There is a quota for poultry representing some 1.4 per cent of overall EU consumption. The four Mercosur countries together are already the EU's leading supplier, with Brazil number one, ahead of Ukraine.
There are also EU quotas for pork, sugar, ethanol, rice, honey, maize and sweet corn.
European farmers have repeatedly protested, saying the deal will lead to cheap imports of South American commodities that do not meet the EU's green and food-safety standards. The European Commission says the EU's standards will not be relaxed.
There are also potential safeguard measures to address possible market disturbances.
Mercosur will give the EU a duty-free 30,000-metric-ton quota for cheeses (now with 16-28 per cent tariffs), phased in over 10 years, with other quotas for milk powders and infant formula.
Mercosur will also phase in tariff reductions for EU wines (from 20-35 per cent now), spirits (mostly 20 per cent), olive oil, fresh fruit, canned peaches and tomatoes, pork products, chocolate and soft drinks.
Further, the deal recognises 350 geographic indications to prevent imitation of certain traditional EU foodstuffs such as parmigiano reggiano cheese.
What comes next?
The Mercosur bloc's four founding members have signalled support for the agreement, which each can implement once its national legislature approves.
In the European Union, the process is more complicated.
After legal review and official translation of the agreement in coming months, the EU may split it up to speed ratification.
The core trade deal could be fast-tracked with approval by a simple majority of EU lawmakers and a qualified majority of EU governments, meaning 15 countries representing at least 65 per cent of the EU population.
To block that process, at least four EU members representing more than 35 per cent of the EU population would need to oppose it.
What is the Irish Government's stance?
The Government said it would oppose the new Mercosur trade deal between the EU and South American countries because of the threat to Irish farming interests, setting up conflict with Brussels from the outset of Ursula von der Leyen’s second term at the helm of the European Commission.
Irish officials will examine the details of the agreement Ms von der Leyen signed in Montevideo, Uruguay, with the leaders of Brazil, Argentina, Paraguay and Uruguay.
But a spokesman for Tánaiste and Minister for Foreign Affairs Micheál Martin said Mr Martin’s opposition to the agreement remained unchanged.
Both the Tánaiste and Taoiseach Simon Harris vowed to oppose the deal in its then form during the election campaign. With formal talks on a new coalition led by Fianna Fáil and Fine Gael set to begin next week, the two leaders came under immediate pressure not to waver from their election stance.
Will other EU countries block the deal?
Ireland may find an ally with key EU member France.
The French government, already facing a domestic crisis, will look to rally resistance and may find other support from Austria, Poland and the Netherlands. Together they account for around 30 per cent of the EU population, so they would need to find more opponents to block the deal.
Germany, Spain and nine other EU members, together home to about 40 per cent of the EU population, have urged negotiators to reach a deal this year.
Implementation of the wider political accord between the trade blocs, including new rules for cross-border investment, would likely require approval by national parliaments in the 27 EU member countries - a much longer process.
What is at stake?
Leaders have touted the accord as the world's largest trade and investment partnership, bringing together a market of more than 700 million people. Economists estimate the deal could do away with €4 billion of tariffs annually, which are likely to be phased out over several years.
The accord should help Europe export more autos and manufactured goods, while securing access to minerals crucial for its energy transition.
It should also lower trade barriers for South American meat and grains, which has angered Irish and other European farmers.
Why has the deal taken so long?
Negotiators agreed to a version of the trade deal in 2019, which European nations refused to ratify, citing environmental concerns after the election of former Brazilian president Jair Bolsonaro and a surge in Amazon rainforest fires.
The EU sought assurances on environmental policy in a side letter, which Mercosur countries took as fresh protectionism requiring other concessions in further rounds of negotiations.
Recent talks in Brasilia and Montevideo finally bridged the gap on environmental protections, government purchases and other hot button issues, clearing the way for the new deal to be signed.
