EU and Mercosur Seal Landmark Free Trade Deal After 25 Years of Talks

The European Union and South America’s Mercosur bloc have officially signed a historic free trade agreement, marking a major breakthrough after 25 years of negotiations. The deal was signed on Saturday in Asuncion, Paraguay, by top EU and Mercosur officials and is expected to become the European Union’s largest-ever trade accord once fully ratified.

European Commission President Ursula von der Leyen and European Council President Antonio Costa attended the signing ceremony alongside the presidents of Mercosur member states Argentina, Paraguay, and Uruguay. Brazilian President Luiz Inacio Lula da Silva was not present but was represented by his foreign minister. The agreement must now receive approval from the European Parliament and be ratified by the national legislatures of Argentina, Brazil, Paraguay, and Uruguay before it can take effect.

The EU-Mercosur trade agreement aims to reduce tariffs, improve market access, and strengthen economic cooperation between the two regions, which together represent a combined market of around 700 million people. Von der Leyen described the pact as a milestone that would create the world’s largest free trade zone, emphasizing that it reflects a commitment to fair trade, long-term partnerships, and economic openness amid growing global uncertainty.

Despite receiving broad political backing from most EU member states last week, the deal has faced criticism from European farmers and environmental groups. Critics argue that increased imports of lower-cost agricultural products from South America could harm local producers and contribute to deforestation in the Amazon region. EU leaders have stressed that environmental standards and sustainability commitments remain central to the agreement.

Mercosur leaders have also voiced concerns over certain regulatory requirements but largely see the deal as an opportunity to boost exports, investment, and economic growth. Lula stated that the agreement would open new markets and reinforce Brazil’s broader strategy to diversify trade partnerships, including ongoing negotiations with Canada, the United Arab Emirates, Vietnam, and India.

Trade between the EU and Mercosur reached approximately €111 billion in 2024. The EU primarily exports machinery, transport equipment, and chemical products, while Mercosur exports are dominated by agricultural goods, minerals, wood pulp, and paper. Once implemented, the agreement is expected to significantly reshape transatlantic trade and strengthen economic ties between Europe and South America.