The trade pact struck in 2019 with Mercosur nations Argentina, Brazil, Paraguay and Uruguay after two decades of talks promises to be the EU's largest deal, removing 4 billion euros ($4.8 billion) of import tariffs on its products.
However, there are doubts it will ever enter force due to European concerns over Amazon deforestation and scepticism about Brazil's commitment to the Paris climate change agreement.
"The European Union has made it clear we will need meaningful engagement from Mercosur on these issues before we can proceed with the ratification," Dombrovskis told an online seminar on the topic.
The European Commission vice president said the agreement needed to include tools to monitor and enforce the commitments, particularly on deforestation. The content and nature of these tools, he said, were "under preparation".
The Commission, which oversees trade policy for the 27-nation EU, is in the meantime finalising the agreement's legal text.
"Normally, we would expect that the finalisation ... would be completed by the end of the year. So we have more or less the same timeline in mind as regards this additional agreement concerning the environmental issues," Dombrovskis said.
The Commission could then pass the agreement on in 2022 to the European Parliament and to the grouping of EU countries known as the Council for approval.
($1 = 0.8282 euros)
(Reporting by Philip Blenkinsop. Editing by Mark Potter)
