Digital law in transition: What the EU-Mercosur agreement now means for businesses

With the signing of the EU-Mercosur Agreement (which will come into force much later), trade between the European Union and the MERCOSUR countries will be further liberalized in key areas, including digital services and data-based business models. The agreement (consisting of the EMPA partnership agreement and an interim trade agreement, iTA) primarily aims to remove trade barriers, but expressly leaves the EU's regulatory powers untouched. Nevertheless, the opening of the market has an indirect impact on the practical application of European digital law, as cross-border data processing, digital supply chains, and the use of information technology systems are becoming increasingly important. For companies, the question is therefore less about new material requirements and more about the scope and implementation of existing requirements in an expanded international context. Against this backdrop, this article highlights the general impact of the agreement on data protection, cybersecurity, and the use of artificial intelligence.

I. EU-Mercosur Agreement: Regulatory Framework

The EU-Mercosur Agreement is designed as a comprehensive trade agreement that, in addition to removing tariff barriers to trade, reorganizes access to service markets and investment conditions in particular. In addition to traditional customs regulations, the agreement contains cross-sectoral commitments on market opening, equal treatment of foreign suppliers, and transparency of government regulatory measures. Of particular relevance to companies is the fact that the cross-border provision of services – including digital and data-based services – is legally facilitated and institutionally secured.

At the same time, the agreement explicitly enshrines the principle that the contracting parties retain their regulatory autonomy. Particularly in sensitive areas such as the protection of personal data, public security, or ensuring the stability of digital infrastructure systems, the parties' right to maintain or further develop independent and even restrictive regulations is confirmed. This does not imply mutual recognition of regulatory standards or harmonization of legal requirements.

The easier integration of companies from Mercosur countries into European value and supply chains also means that existing data protection, security, and technology-related obligations are becoming more relevant across borders. The agreement thus forms the starting point for increased application and enforcement of EU digital law in an international context without shifting its substantive standards.

II. Data protection implications

The EU-Mercosur Agreement does not lead to any substantive change in the data protection requirements of the GDPR. The legal requirements for international data transfers, in particular when cooperating with companies in third countries, remain unchanged for EU companies. In this respect, the agreement neither establishes new transfer mechanisms nor does it facilitate data transfer in terms of data protection law.

Nevertheless, the agreement brings about a structural shift in the framework conditions for the data economy. Facilitated cross-border service provision and greater economic integration of the Mercosur countries will mean that data processing involving third countries will become more frequent, more permanent, and more integrated into core business processes in the future. Whereas international data transfers have previously been project-related or sporadic in nature, they may now become an integral part of ongoing business models, for example in the areas of cloud services, IT services, support, and analysis functions.

This development changes the practical implementation of data protection compliance rather than the legal assessment. Compliance with the GDPR is thus moving away from a case-by-case transfer review and toward a continuous management and control task. European companies must ensure that data protection guarantees are not only formally agreed upon, but also permanently implemented and reviewed in organizational, technical, and contractual terms. In particular, issues of transparency, access by government agencies in third countries, and the actual enforceability of agreed-upon protective measures are gaining in importance.

III. Impact on cybersecurity

In the area of cybersecurity, too, the EU-Mercosur Agreement does not lead to any material change in existing EU legal requirements. The relevant obligations to ensure the security of network and information systems and to safeguard digital products and services apply regardless of the country of origin of the companies involved. In this respect, the agreement does not establish new security standards or mutual recognition of national cybersecurity regimes.

Structurally, however, the agreement changes the composition and scope of digital supply and value chains. Easier access to the European market means that providers from Mercosur countries are increasingly involved in security-related functions, for example as cloud, hosting, or software service providers or as suppliers of digital components. Cybersecurity risks are thus increasingly shifting to international cooperation and outsourcing structures, without any change in the EU legal standard for security requirements.

For European companies, this means a shift in focus from purely technical security to a more governance-driven cybersecurity strategy. The selection, contractual integration, and ongoing monitoring of external service providers are becoming increasingly important, as security incidents or vulnerabilities at third-party providers can have a direct impact on a company's own compliance and the functionality of its central systems. In particular, there are increasing requirements for risk analysis, incident management processes, and the ability to identify and address security-related events early on, even along international supply chains.

IV. Mercosur and artificial intelligence

In the field of artificial intelligence, too, the EU-Mercosur Agreement is structurally acting as an accelerator of cross-border AI-related value creation. Although the content of the EU regulatory framework will not change, the facilitation of digital services will particularly benefit the outsourcing of development, training, and operational services, as well as the integration of external providers into data- and computation-intensive processes. AI systems intended for the European market or used in the EU can thus make more frequent use of components, models, or services developed or operated in Mercosur countries.

This internationalization is changing the requirements for AI governance in companies. While regulatory standards remain unchanged, the complexity of organizational control of AI systems across national and corporate boundaries is increasing. Responsibilities for training data, model architectures, updates, and ongoing operations must be clearly assigned, even if individual technical or operational steps take place outside the EU. At the same time, transparency, documentation, and traceability of development and decision-making processes are becoming increasingly important, as they are prerequisites for compliance with European AI requirements in international constellations.

V. Recommendations for action

Against the backdrop of the agreement, EU companies should not fundamentally realign their existing digital compliance structures, but they should review their international resilience. The increasing involvement of service providers, technology partners, and value creation stages from Mercosur countries requires, in particular, greater integration of legal, IT, purchasing, and compliance functions.

It is therefore advisable to organize cross-border digital services and data processing not just as individual cases, but as permanent and scalable structures. Companies should check whether their contractual, technical, and organizational arrangements are sustainable even with growing use, longer terms, and more complex supply chains, and whether they enable consistent control.

In addition, the transparent allocation of responsibilities is becoming increasingly important. Regardless of whether services are provided internally or by external partners, it should be clearly defined who is responsible for security, data processing, system operation, and compliance with regulatory requirements, and how this responsibility is controlled in practice. A lack of clarity in international cooperation models increasingly harbors legal and operational risks.

Finally, companies should review their existing risk and control processes to ensure that they are effective even in internationally distributed structures. This includes, in particular, robust escalation and communication channels, central documentation of relevant decisions, and the ability to consistently implement regulatory requirements across country and company boundaries.

VI. Conclusion and outlook

The EU-Mercosur Agreement does not lead to a material reorganization of European digital law, but it does change the practical framework conditions for its application. Facilitated economic cooperation means that cross-border digital services, data processing, and technological dependencies are becoming increasingly important. For companies, this means that the focus is shifting less toward new legal requirements and more toward questions of organizational implementation, management, and control of existing obligations. Against this backdrop, the ability to effectively implement digital compliance in internationalized structures is increasingly becoming a decisive competitive and risk factor. 

This article was created in collaboration with our student employee Emily Bernklau.