EU and Mercosur Sign Landmark Free Trade Agreement After 25 Years of Talks

Reuters

Authorities of the EU and Mercosur pose during the signing ceremony of the trade agreement in Asuncion, Paraguay, 17 January 2026.

Top officials from the European Union and the South American bloc Mercosur signed a free trade agreement on Saturday in Paraguay, paving the way for the EU’s largest-ever trade accord after 25 years of negotiations.

The agreement, which aims to reduce tariffs and boost trade between the two regions, must now receive the approval of the European Parliament and be ratified by the legislatures of Mercosur member states Argentina, Brazil, Paraguay and Uruguay.

European Commission President Ursula von der Leyen and European Council President António Costa attended the signing ceremony alongside the presidents of Mercosur countries, with the exception of Brazilian President Luiz Inácio Lula da Silva, who was represented by his foreign minister.

The deal received backing from most European countries last week, despite concerns raised by farmers and environmental groups, who fear an influx of low-cost South American imports and increased deforestation.

Von der Leyen, who met with Lula before travelling to Asunción for the signing, said the agreement would create the world’s largest free trade zone.

"This agreement sends a very strong message to the world. It reflects a clear and deliberate choice. We choose fair trade over tariffs. We choose a productive, long-term partnership over isolation," she said on Saturday.

"This agreement will help both our blocs navigate an increasingly turbulent political environment without abandoning our values, marking a true milestone in shoring up our economic security," Costa said.

While Mercosur officials have expressed reservations about certain regulations within the agreement, Brazilian President Luiz Inácio Lula da Silva said on Friday in Rio de Janeiro that the deal would unlock greater opportunities and stimulate increased trade and investment for both sides.

In a statement, Brazil’s government said the agreement is “emblematic of Lula’s efforts to expand and diversify markets,” adding that South America’s largest economy is also negotiating trade agreements with the United Arab Emirates, Canada and Vietnam, in addition to expanding a tariff-preference pact with India.

Trade between the European Union and Mercosur, which together represent a market of around 700 million people, reached €111 billion in 2024. EU exports primarily include machinery, chemical products and transport equipment, while Mercosur exports are mainly agricultural goods, minerals, wood pulp and paper.

Source: Reuters



PUKMEDIA