The European Union and the South American trade bloc Mercosur signed a free trade agreement on Saturday, concluding 25 years of negotiations and paving the way for the EU’s largest trade deal to date.
The agreement, signed in Paraguay, aims to lower tariffs and expand trade between the two regions. It must still be approved by the European Parliament and ratified by the national legislatures of Mercosur members Argentina, Brazil, Paraguay and Uruguay before it can take effect.
European Commission President Ursula von der Leyen and European Council President Antonio Costa attended the signing ceremony alongside the presidents of Mercosur countries, with the exception of Brazilian President Luiz Inacio Lula da Silva, who was represented by his foreign minister.
European Council President Antonio Costa, European Commission President Ursula von der Leyen, Paraguay’s President Santiago Pena and Argentina’s President Javier Milei during the signing ceremony of a free trade agreement between the European Union and the South American bloc Mercosur, ending more than 25 years of negotiations, in Asuncion, Paraguay, January 17, 2026. REUTERS/Cesar Olmedo
Von der Leyen said the pact would create the largest free trade zone in the world. “This agreement sends a very strong message to the world,” she said. “We choose fair trade over tariffs. We choose a productive, long-term partnership over isolation.”
The deal received backing from most EU member states last week, despite opposition from some farmers and environmental groups concerned about an influx of cheaper South American agricultural imports and the potential impact on deforestation.
Costa said the agreement would help both blocs manage a more volatile global political environment while safeguarding their values and strengthening economic security.
Panama’s President Jose Raul Mulino, Bolivia’s President Rodrigo Paz, European Council President Antonio Costa, European Commission President Ursula von der Leyen, Argentina’s President Javier Milei, Uruguay’s President Yamandu Orsi and Brazil’s Foreign Minister Mauro Vieira listen to Paraguay’s President Santiago Pena’s speech, during the signing ceremony of a free trade agreement between the European Union and the South American bloc Mercosur, ending more than 25 years of negotiations, in Asuncion, Paraguay, January 17, 2026. REUTERS/Cesar Olmedo
Mercosur officials have previously raised concerns about certain regulatory aspects of the pact, but Lula said on Friday that the agreement would unlock new opportunities and boost trade and investment for both sides.
Trade between the EU and Mercosur reached 111 billion euros in 2024. EU exports to the bloc are mainly machinery, chemical products and transport equipment, while Mercosur exports are largely agricultural goods, minerals, wood pulp and paper.
