Implications of Free Trade between Mercosur and the European Union

For more than two decades, the trade agreement between Mercosur and the European Union has been a ghost that appears, disappears, and returns to haunt. It promises historic opportunities for agribusiness, but also justified fears among producers who know that opening markets does not always mean winning. In the case of potatoes and their derivatives—such as frozen French fries—the debate becomes especially interesting, because what is at stake is not only who sells more, but under which rules.

Just ten years ago, 66% of the French fries consumed in Latin America were imported from Europe; the remaining 34% came from local plants. Today the ratio has flipped: 66% is produced within the region and only a third arrives from overseas. It is a structural shift that reflects investment, industrial development, and a new confidence in Latin America’s productive capacity.

The rise of factories in Brazil, Mexico, Argentina, Colombia, and Chile—together with the arrival of giants like Lamb Weston, Simplot, and McCain—has transformed the landscape. Latin America is no longer just a market: it is a production hub that feeds its own consumption and exports to its neighbors.

In this context, the Mercosur–EU agreement cuts both ways. On one hand, it promises lower tariffs and preferential access to a European market of nearly 450 million consumers that demands high-quality agri-food products. On the other, it could impose environmental and sanitary conditions that many southern producers may find impossible to meet.

Europe regulates; the rest adapts

The European Union has become the epicenter of global environmental and sanitary policy. Its new regulations on agrochemicals, carbon footprint, animal welfare, and digital traceability are praised by public opinion… but feared by farmers. Argentine and Brazilian producers view with suspicion the possibility that the agreement could force compliance with European standards without access to the same inputs or subsidies.

Meanwhile, within Europe itself, an agricultural revolt is growing. Potato growers in Spain, Italy, and France have long complained that they compete at a disadvantage against potatoes imported from North Africa—from countries such as Egypt or Morocco—which arrive with lower labor costs and without the same environmental requirements. If reduced-tariff imports from South America are added to the mix, rural discontent in Europe could escalate even further.

The problem is clear: Europe imposes internal regulations that raise producers’ costs, while simultaneously opening its borders to potatoes that do not meet those rules. It is a fragile balance that could rupture with the Mercosur–EU agreement.

For Mercosur, a conditional opportunity

From the South’s perspective, the agreement represents a strategic gateway. Brazil and Argentina together account for nearly 150,000 hectares of potatoes and a market of more than 250 million consumers. Adding Uruguay and Paraguay, Mercosur is one of the most important agricultural hubs in the Southern Hemisphere.

Preferential access to Europe could boost exports of industrial potato products, starches, and even genetics (seed), especially if the region positions itself as a supplier with traceability, sustainability, and low energy costs. But it also means accepting Brussels’ rules: restrictions on agrochemicals, environmental certifications, limits on emissions and residues, and controls that require investment and bureaucracy.

Industry leaders know this: the most modern plants—such as Lamb Weston’s in Mar del Plata, or the new Simplot and McCain lines in Brazil—are already built to that sustainability paradigm. For the average grower, however, meeting European protocols can be prohibitive.

Europe is losing commercial weight, but sets the pace

The paradox is that, although Europe’s commercial influence in Latin America has waned, its regulatory power remains intact. Europe may sell less, but it still defines how production takes place.

And while Europeans argue among themselves over African imports, Latin America is consolidating as the new epicenter of growth. It is likely that within the next five years the region will reach 80% self-sufficiency in processed potatoes.

An agreement that demands maturity

The question is not whether the Mercosur–EU agreement will bring opportunities, but for whom. The countries with the greatest industrial infrastructure—Brazil and Argentina, above all—could benefit if they manage to certify their processes and leverage low production costs. Smaller producers, however, could end up caught between two worlds: too expensive to compete with Africa, too “dirty” to enter Europe.

Unlike the 1990s, today the challenge is not to open markets, but to define the values under which we want to trade. If Latin America succeeds in advancing its own narrative—sustainability adapted to its reality, not imposed from Brussels—the agreement can serve as a development lever. Otherwise, it risks becoming a distorted mirror in which the South’s potato only has value if it looks like the North’s.