The EU-Mercosur trade agreement and access to the public procurement market
Relations between the European Union and the Mercosur bloc of South American countries (Argentina, Brazil, Paraguay and Uruguay) are entering a new phase. On Friday, 9 January 2026, despite opposition by members including Poland and France, the EU member states approved a trade agreement with Mercosur which had been negotiated for many years. It is to be signed this coming Saturday, 17 January.
The most important and most controversial aspect of the agreement is the liberalisation of trade in goods and services, particularly the introduction of customs preferences for certain agricultural products from Mercosur, in exchange for opening up these markets to industrial goods from the EU. The issue of public procurement has attracted much less attention.
For decades the area of public procurement displayed a deep asymmetry in the EU’s relations with South American countries. The European market, functioning on the basis of the World Trade Organization’s Government Procurement Agreement (GPA), offers broad access to foreign contractors. The Mercosur member states are not signatories of the GPA, and their national public procurement systems have been centred on protectionist mechanisms, effectively limiting the participation of external contractors. This is to change.
Until now, under the doctrine developed following the issuance of the judgment in C‑652/22, Kolin, access to public tenders in the EU by contractors from Mercosur countries could be freely restricted. Now, under the EU-Mercosur agreement, this doctrine will no longer apply to them.
The Kolin doctrine
To understand the importance of this change, it is necessary to step back and examine the judgment by the Court of Justice in the Kolin case, issued on 22 October 2024. That case brutally exposed the situation of contractors from third countries that have no free trade agreement with the EU and are not parties to the GPA. This applies to such countries as China, India and Turkey. Mercosur also fell into that group, as its members are not signatories of the GPA. The Kolin ruling revolutionised the interpretation of EU laws on access to public procurement procedures in EU countries. The Court of Justice held that undertakings from those third countries have no automatic right to enter EU-based tenders. This position contradicted the earlier practice of equal treatment of all contractors regardless of their country of origin.
First and foremost, the Court of Justice stressed that access to the EU public procurement market by contractors from third countries falls within the common trade policy subject to the exclusive competence of the EU. The court thus found that if there is no general law issued by the EU in this respect, each contracting authority will have to decide whether to admit contractors from third countries. Poland’s Public Procurement Law provides, in turn, that if the contracting authority wishes to admit contractors from third countries to participate in a tender, the contracting authority must expressly state this.
But even if a contractor from a third country is admitted to the contract award procedure, it will be deprived of the protections of the EU’s anti-discrimination provisions. The Court of Justice thus confirmed the wording of the Classic Procurement Directive (2014/24/EU), which guarantees equal treatment only to entities from the EU or countries with relevant agreements in place with the EU. The Court of Justice confirmed this holding in C-266/22, Qingdao (judgment of 13 March 2025).
The impact of the Kolin ruling on legislation within the EU can be seen for example in the amendment of the Public Procurement Law in Poland. The newly added provisions guarantee equal access to public contracts only for contractors from third countries that are parties to the GPA or international agreements with the EU guaranteeing access to the public procurement market under principles of reciprocity and equality. A provision was also added empowering contracting authorities to make their own decision to admit contractors from third countries that are not covered by the GPA or other agreements with the EU. Otherwise, it is presumed that contractors from such third countries are prohibited from participating.
The EU-Mercosur agreement and Kolin
The EU-Mercosur agreement modifies the Kolin doctrine with respect to Mercosur countries. For the public procurement market, the agreement introduces the rule of equal treatment, as expressly stated in Art. 12.6 of the interim trade agreement. This provision requires the parties to afford goods, services and suppliers from the other party “no less favourable” treatment than domestic goods, services and suppliers. Consequently, in the area covered by the agreement, the duty of equal treatment under Art. 18 of the Treaty on the Functioning of the European Union will replace the existing rule of a lack of rights for those third countries under Kolin. Under Art. 216(2) TFEU, the agreement is binding on all EU member states. Contractors from Mercosur countries will thus be entitled to seek admission to public tenders in the EU (and conversely for EU-based contractors in Mercosur countries).
An entity excluded from an EU tender based on a lack of reciprocity can rely on the provisions of the EU-Mercosur agreement before the national court. This results in a ban on discrimination: the contracting authority will not be allowed to apply additional formal requirements or automatic exclusions not existing with respect to EU-based entities. In this respect, use of the EU’s International Procurement Instrument is excluded, and Art. 12.11 of the interim trade agreement expressly prohibits use, imposition or enforcement of offsets in procurements covered by the agreement. This standard will apply only when certain monetary thresholds are crossed, and not in all fields. The agreement entirely exempts from its requirements procurements necessary for national security or defence, and also allows the use of non-discriminatory measures necessary to protect public morals, order or safety, human, animal, or plant life, or intellectual property. Moreover, each of the contracting states introduced limitations in an annex to protect their most sensitive markets. For example, Paraguay obtained consent to apply a 20% margin of price preferences for domestic products and services for a period of 18 years. A condition for the use of this mechanism is to ensure a certain share of local components (40% for goods) or hiring of Paraguayan personnel (70% for construction works).
Who will benefit?
The main beneficiaries of opening the public procurement market will be European firms, to a much greater extent than Latin American firms. Even now, European companies have a strong presence on the markets there. According to European reports, the main beneficiaries from opening of access to public procurement markets in the Mercosur countries will be such groups as Stellantis, Volkswagen, Mercedes-Benz, BMW, Renault, Airbus, Siemens, Thyssenkrupp, TotalEnergies, Repsol, Enel, Iberdrola, BASF, Bayer, SAP, Santander, BBVA, Carrefour, Inditex and ArcelorMittal.
We are sorry to point out that there are no Polish companies listed in the published projections of the main beneficiaries of the agreement. But this doesn’t mean there are no prospects for them—quite the contrary. Polish suppliers in the automotive and transport sector may become major beneficiaries of the opening of public procurement markets in the Mercosur countries, due to the high quality of their goods and services, often offered at lower prices than their Western European competitors. The strong trend in South America of growth in public transportation presents a particular opportunity. This opens the door for Polish manufacturers from the bus, tram and rail sector. In addition, there are notable opportunities for the machinery and electric industry, pharma, chemicals, IT, and green technologies.
Entry into force of the EU-Mercosur agreement will also open up the EU’s EUR 2 trillion public procurement market to contractors from South America, eliminating legal barriers such as the IPI mechanism and giving them equal rights in tenders. So far, companies from Mercosur countries have not had a noticeable presence on this market. Their market share is marginal, and not systematically monitored. In 2016–2019 only some 7% of EU contracting institutions received bids from third countries, and this group was dominated by companies from the US, Canada, Turkey, South Korea, Japan and Norway (and following Brexit, also from the UK). In 2021 the European Commission estimated their share at about 5%. Although there are no new aggregated data, a report by Lucian Cernat from ECIPE indicates that this share is currently at most only slightly higher. South American companies enter tenders in Europe only sporadically, typically as consortium members.
Lifting of barriers to the market may spark an increased presence of Latin American companies in public tenders. The biggest beneficiaries in this respect may prove to be large Brazilian agribusiness players, who are also active in the biofuels sector, as well as Argentinian and Uruguayan IT firms or the Brazilian company Embraer, the main competitor of Airbus and Boeing on the aviation market. Spanish-language sources also point to the potential of such groups as Corporación América, Raízen, Odebrecht, Techint and Petrobras. Most of these are from Brazil. For this reason, the other Mercosur countries were able to negotiate stronger protection for their market against penetration by European contractors.
Summary
In public procurement, the UE-Mercosur agreement will eliminate the application of the doctrine in C‑652/22, Kolin, to Mercosur countries, in favour of the principle of domestic treatment. This will ensure market access for contractors from both blocs, along with the guarantees backing this access, particularly the right to appeal and to seek judicial review.
Although the elimination of barriers (such as the IPI mechanism or offset requirements) will open the EUR 2 trillion EU market to companies from Mercosur countries, these South American companies have so far played only a negligible role in EU-based tenders, and conclusion of the trade agreement is not expected to change this picture radically. Due to barriers of logistics and capital, a sudden surge of bids from Mercosur-based companies should not be expected. However, in certain market segments, such as biofuels, agribusiness and IT services, specialised new players may appear.
In practice, the main beneficiaries of the market opening will be Western European groups, which have been present in South America for years. For Polish companies, the trade agreement presents a challenge, but also an opportunity. The opening of Mercosur markets to modernisation of transport, as well as digitalisation, perfectly aligns with the export potential of Polish manufacturers of buses and rolling stock and in the IT sector—even if they are overlooked in lists of the expected global beneficiaries.
Filip Olszówka, Dispute Resolution & Arbitration practice, Julia Rutka, Infrastructure, Transport, Public Procurement & PPP practice, Wardyński & Partners
