EU, Mercosur Sign Landmark Free Trade Deal After Decades of Talks

ERBIL (Kurdistan24) — The European Union and the Mercosur bloc of South American nations formally signed a long-sought free trade agreement on Saturday, sealing one of the world’s largest trade pacts after more than 25 years of negotiations and reinforcing commercial ties amid rising protectionism and global trade friction.

The signing ceremony in Paraguay’s capital, Asuncion, marked a major geopolitical victory for the EU at a time of expanding US tariffs and surging Chinese exports. The agreement significantly deepens Europe’s economic footprint in a resource-rich region increasingly contested by Washington and Beijing, while signaling that South America intends to maintain diversified trade and diplomatic partnerships.

Although the deal still requires ratification by the European Parliament before entering into force, approval is considered virtually assured in South America, where the agreement enjoys broad political backing.

Mercosur comprises Argentina and Brazil—the region’s two largest economies—along with Paraguay and Uruguay. Bolivia, the bloc’s newest member, is not included in the agreement but could join in the coming years, while Venezuela remains suspended from Mercosur and is excluded from the deal.

Backed by South American agricultural exporters and European industrial interests, the accord will gradually eliminate more than 90 percent of tariffs on a wide range of goods, from Argentine beef to German automobiles.

Once implemented, it will create a vast free trade zone covering more than 700 million consumers, lowering costs and expanding market access on both sides of the Atlantic.

European Commission President Ursula von der Leyen framed the agreement as a clear rejection of protectionism, portraying it as a counterweight to the disruptive trade policies associated with the administration of US President Donald Trump.

“It reflects a clear and deliberate choice: We choose fair trade over tariffs. We choose a productive long-term partnership over isolation,” von der Leyen said at the ceremony, in remarks widely seen as a veiled rebuke of Washington.

Her comments coincided with Trump’s announcement of new 10 percent tariffs on several European countries amid disputes over Greenland.

Brazilian President Luiz Inácio Lula da Silva, a longtime champion of the deal, hailed the agreement as a triumph for multilateralism, saying it demonstrated that cooperation—not unilateralism—was the path to sustainable growth. Lula, however, did not attend the signing ceremony, underscoring lingering tensions between the two blocs.

Brazil had been expected to host the signing last month during its Mercosur presidency, but European countries postponed the event while seeking additional concessions to protect their farmers from competition with South American agricultural imports. The move sparked frustration in Brasília and across the region, where EU demands were widely viewed as excessive.

One of the main obstacles delaying the agreement for years was Brussels’ insistence on stringent environmental and production standards, including deforestation controls and packaging regulations. European farmers have argued they cannot compete with South American producers operating under looser rules.

After incorporating environmental safeguards, strict quotas on sensitive imports such as beef and sugar, and phased tariff reductions, the EU further eased domestic opposition by pledging additional subsidies to its farmers—helping to bring key countries, including Italy, on board.

Despite the breakthrough, opposition remains within parts of Europe. France continues to resist the deal, with President Emmanuel Macron concerned that farmers’ anger could fuel support for the far right ahead of the 2027 presidential election. Powerful agricultural lobbies are still seeking to block ratification in the European Parliament.

EU Trade Commissioner Maroš Šefčovič said he would begin intensive lobbying efforts this week to secure parliamentary approval, expressing confidence that the agreement could be ratified in the first half of the year.

Without naming the United States, Šefčovič said the deal sent a clear message that Europe and Mercosur favor predictable rules, open markets, and international law over tariffs and power politics.

The accord also highlights Mercosur’s renewed relevance after years marked by political disputes and economic instability. Perhaps most notable was the enthusiastic support of Argentine President Javier Milei, a libertarian who once derided Mercosur as a “prison” and threatened to withdraw from the bloc.

Speaking at the ceremony, Milei said Argentina’s experience showed that protectionism and economic closure were key drivers of stagnation, signaling a sharp shift from his earlier skepticism and underscoring the bloc’s revived momentum under the new trade framework.