After more than 25 years of negotiations, the EU and Mercosur (e.g., Argentina, Brazil, Paraguay, Uruguay) reached a political agreement on trade in December 2024. While it’s a major milestone, the deal is not yet in force. It still needs to clear multiple steps, including approval by the European Council, European Parliament, and ratification by all member states.
What Is The EU/Mercosur Trade Deal?
Political Hurdles & Challenges
Several EU countries, including France, Poland, Austria, and the Netherlands, remain skeptical of the agreement. As a result, the path to full ratification will likely take years.
If adopted, the agreement would:
- Gradually eliminate tariffs on over 90% of goods over a 10-year period.
- Apply tariff-rate quotas (TRQs) to sensitive products such as ethanol.
Ethanol & HS 2207: Why It Matters
Currently, imports into the EU are subject to:
- Undenatured ethyl alcohol (≥80% ABV): €19.2 per hectoliter
- Denatured alcohol, commonly used in the chemical industry: €10.2 per hectoliter
Under the new agreement:
- HS 2207 (ethyl alcohol) is categorized as an industrial product. Tariffs could be eliminated entirely.
However, ethanol for fuel use may be restricted under a TRQ of 650,000 tons per year, split into:
- 450,000 tons for industrial use (duty-free)
- 200,000 tons for fuel and other uses (reduced duty, phased in)
Industry Concerns
Trade groups like ePURE warn that the language around “industrial use” is vague. If it includes beverages or cosmetics, Mercosur imports could displace a large share of Europe’s industrial ethanol market.
The bottom line is that for bulk alcohol buyers, the EU-Mercosur agreement could eventually bring lower or even zero tariffs on HS 2207 products. However, uncertainty remains regarding how fuel ethanol and industrial use will be defined, and securing political approval is still far from guaranteed.
At Sasma BV, we’re keeping a close watch on these developments. As the agreement progresses, we’ll share updates on how it may affect buying bulk alcohol, sourcing opportunities, and pricing moving forward.
