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

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

Senior leaders from the European Union and the South American trade bloc Mercosur on Saturday signed a long-awaited free trade agreement in Paraguay, marking a major breakthrough after more than two decades of negotiations and setting the stage for the EU’s largest trade deal to date.

The agreement aims to cut tariffs and deepen economic ties between the two regions. Before it can take effect, however, it must secure approval from the European Parliament and be ratified by the national legislatures of Mercosur member states — Argentina, Brazil, Paraguay and Uruguay.

European Commission President Ursula von der Leyen and European Council President Antonio Costa attended the signing ceremony in Asuncion alongside the presidents of Mercosur countries. Brazilian President Luiz Inacio Lula da Silva was absent, sending his foreign minister to represent him.

The deal moved forward after receiving political backing from most EU member states last week, overcoming resistance from some farming and environmental groups. Critics have warned the pact could open the door to cheaper South American agricultural imports and accelerate deforestation, particularly in the Amazon region.

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Von der Leyen, who met President Lula ahead of the signing, described the agreement as a strategic milestone that would establish the world’s largest free trade area.

“This agreement sends a powerful signal to the world,” she said. “It shows a conscious choice — fair trade instead of tariffs, cooperation instead of isolation, and a long-term partnership built on mutual benefit.”

Trade between the two blocs, which together represent a market of around 700 million people, reached €111 billion in 2024. The European Union primarily exports machinery, chemicals and transport equipment, while Mercosur countries largely ship agricultural products, minerals, wood pulp and paper.

If ratified, the agreement is expected to significantly reshape trade flows between Europe and South America, strengthening supply chains and geopolitical ties at a time of growing global trade uncertainty.