EU and South American leaders signed a landmark EU–Mercosur free trade agreement in Asuncion, Paraguay, establishing what officials called the world’s largest free trade area after 25 years of negotiations. The accord spans more than 700 million consumers and is billed as a decisive turn toward open markets even as it faces a contentious ratification fight in Europe.
“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,” European Commission President Ursula von der Leyen said at the signing ceremony.
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The deal aims to eliminate tariffs on more than 90% of bilateral trade, deepening commercial ties between the European Union and Mercosur members Argentina, Brazil, Paraguay and Uruguay. According to officials, total trade between the blocs reached over €111 billion in 2024, and the agreement is expected to lower costs for consumers and businesses while clarifying standards and market access.
In practical terms, the treaty is set to favor European exports such as cars, wine and cheese, while easing entry for South American beef, poultry, sugar, rice, honey and soybeans into the European market. Together, the EU and Mercosur account for roughly 30% of global GDP, underscoring the agreement’s economic reach.
Before it can take effect, the pact must be approved by the European Parliament and ratified by the legislatures of the four Mercosur countries. The political test will be steep: European farm groups have mobilized against the deal, arguing that it could flood EU markets with lower-cost imports produced under standards they view as less stringent than Europe’s.
That backlash has intensified in recent days, with thousands protesting across Ireland, France, Poland and Belgium. Farmer associations say the terms risk undercutting EU producers on price and eroding hard-won environmental and animal welfare benchmarks. EU officials counter that the agreement includes mechanisms to uphold rules and that opening markets will strengthen supply chains and competitiveness across both regions.
European Council head Antonio Costa framed the accord as an explicit defense of rules-based commerce. It sends “a message of defense of free trade, based on rules, of multilateralism and international law as the basis for relations between countries and regions,” he said, contrasting it with “the use of trade as a geopolitical weapon.”
The timing is notable. The breakthrough follows a period marked by widening tariff use and trade threats by the administration of U.S. President Donald Trump, pushing countries to shore up alternative partnerships and diversify economic ties. EU and Mercosur negotiators clinched the deal in Brussels last week after years of false starts.
Regional leaders sought to underscore the pact’s geopolitical and economic significance. Uruguay’s president Yamandu Orsi attended the signing. Brazil’s President Luiz Inacio Lula da Silva did not, but met von der Leyen in Rio de Janeiro yesterday, where he hailed the accord as essential for prosperity and multilateralism.
Supporters say the agreement will expand market access, lock in supply chains for key commodities and industrial goods, and elevate the strategic relationship between Europe and South America. Skeptics warn that ratification could falter unless there are firmer guarantees on agricultural standards, environmental protections and safeguards for sectors exposed to import competition.
For now, the deal’s champions are leaning into momentum. Von der Leyen called it a choice for “a productive, long-term partnership.” Whether parliaments on both sides of the Atlantic agree will determine if the long-delayed pact becomes a pillar of global trade or another pause in an era of renewed protectionism.
By Abdiwahab Ahmed
Axadle Times international–Monitoring.
