Dora Meredith is the director of ODI Europe. John Clarke is a former senior trade negotiator for the European Commission and former head of the EU Delegation to the WTO and the U.N. He is a fellow at Maastricht University and the Royal Asiatic Society, and a trade adviser for FIPRA public affairs.

The EU rarely gets second chances in geopolitics. Yet last week, the European Parliament chose to throw one away. By voting to refer the long-awaited trade agreement with the Mercosur bloc to the Court of Justice of the EU for a legal opinion — a process that may take up two years — lawmakers dealt a serious blow to Europe’s credibility at a moment when speed and reliability matter more than ever.

After more than two decades of negotiations, this deal was meant to signal that Europe could still act decisively in a world of intensifying geopolitical competition. As European Commission President Ursula von der Leyen argued this month, it was the ultimate test of Europe’s continued relevance on the world stage. Oblivious to this, the Parliament’s decision reinforces the perception that the bloc is unable to follow through, even when an agreement is finally within reach.

It is, by any reasonable measure, a strategic own goal.

The consequences of this go well beyond trade. Mercosur governments spent years negotiating this free trade agreement (FTA) in good faith, navigating Europe’s hesitation, shifting demands and inconsistent political signals. Understandably, they are now interpreting the referral to the court as a political move. For partners already hedging their bets in an increasingly contested global landscape, it reinforces doubts over whether Europe can be relied on.

Meanwhile, for Europe, the true damage is to a deeper truth it all too often obscures: That its real power comes from the ability to make such agreements and then implement them seriously, consistently and at scale.

The EU–Mercosur agreement isn’t just another trade deal. It was designed as a framework for long-term economic, political and strategic partnership with a region where Europe’s influence has been steadily eroding. It offers comprehensive market access in goods and services, clearer investment rules, access to critical materials, structured political dialogue and a cooperation-based approach to managing disputes.

Taken together, it is meant to anchor Europe more firmly in South America at a time when others, most notably China, have moved faster and with fewer constraints. And while that level of ambition hasn’t disappeared with the Parliament’s vote, it has been put at serious risk.

Over the years, much of the criticism surrounding the Mercosur deal has focused on sustainability. Indeed, if eventually passed, this will be the litmus test for whether the EU can translate its values into influence. And to that end, the deal makes a wide set of previously voluntary commitments legally binding, including the implementation of the Paris climate targets and adherence to international conventions on labor rights, human rights, biodiversity and environmental protection. However, it does so through dialogue-based enforcement rather than automatic withdrawal in the face of noncompliance — an approach that reflects the political realities in both Brussels and the Mercosur countries.

This has disappointed those calling for tougher regulation, but it highlights an uncomfortable truth: Europe’s leverage over sustainability outcomes doesn’t come from pretending it can coerce partners into compliance but from sustained engagement and cooperation. That was a red line for Mercosur governments, and without it there would be no agreement at all.

The deal’s novel “rebalancing mechanism” sits within this logic, as it allows Mercosur countries to suspend concessions if future unforeseen EU regulations effectively negate promised market access. Critics fear this provision could be used to challenge future EU sustainability measures, but Mercosur countries see it as a safeguard against possible unilateral EU action, as exemplified by the Deforestation Regulation. Moreover, in practice, such mechanisms are rarely used. Plus, its inclusion was the price of securing an additional sustainability protocol.

Most crucially, though, none of this will resolve itself through legal delay. On the contrary, postponement weakens Europe’s ability to shape outcomes on the ground. Research from Brazil’s leading climate institutes shows that ambitious international engagement strengthens domestic pro‑environment coalitions by increasing transparency, resources and political leverage. Absence, by contrast, creates space for actors with far lower standards.

The same logic applies to the deal’s economic dimension. The Commission rightly highlights the headline figures: Billions of euros in tariff savings, expanded market access, secure access to critical minerals and growing trade. According to a recent study by the European Centre for International Political Economy, each month of delay represents €3 billion in foregone exports.

But these numbers matter less than what lies beneath them: Europe will be gaining all this while offering limited concessions in sensitive agricultural sectors; and Mercosur countries will be gaining access to the world’s largest single market — but only if they can meet demanding regulatory and environmental standards that could strain domestic capacity.

Again, the real power lies in the deal’s implementation. If managed well, such pressures can drive investment, modernize standards and reduce dependence on raw commodity exports as Latin American think tanks have argued. This transition is precisely what the EU’s €1.8 billion Global Gateway investment package was designed to support. And delaying the agreement delays that as well.

The Parliament’s decision isn’t just a procedural setback — it damages Europe’s greatest strength at a time when hesitation carries real cost. It also creates an immediate institutional dilemma for the Commission. Despite the judicial stay, the Commission is legally free to apply the agreement provisionally, but this is a difficult call: Apply it and enter a firestorm of criticism about avoiding democratic controls that will backfire the day the Parliament finally gets to vote on the agreement; or accept a two-year delay and postpone the deal’s economic benefits possibly indefinitely — Mercosur countries aren’t going to hold out forever.

If it is going to recover, over the coming months Europe has to do everything possible to demonstrate both to its Mercosur partners and the wider world that this delay doesn’t amount to disengagement. This means sustained political dialogue, credible commitments on investment and cooperation — including the rollout of the Global Gateway — as well as a clear plan for the deal’s implementation the moment this legal process concludes.

Two years is an eternity in today’s geopolitical climate. If Europe allows this moment to pass without course correction, others won’t wait. The deal might be imperfect, but irrelevance is far worse a fate. Europe must be much bolder in communicating that reality — to the world and, perhaps more urgently, to its own public.