The European Union and the Mercosur bloc of South American nations have formally signed a long-awaited free trade agreement, marking a major milestone in global trade cooperation amid rising protectionism and economic uncertainty.
The agreement aims to significantly reduce tariffs and boost trade between the two regions. It now awaits approval from the European Parliament and ratification by the national legislatures of Mercosur members Argentina, Brazil, Paraguay and Uruguay. Once approved, the deal is expected to come into force by the end of 2026.
Signed in Asuncion, Paraguay, the pact concludes more than 25 years of complex negotiations that were frequently delayed by political shifts, environmental concerns, and opposition from agricultural groups. Leaders from both sides described the signing as a historic step toward open, rules-based trade and long-term economic partnership.
The deal covers a combined market of over 700 million people and is expected to eliminate tariffs on more than 90% of bilateral trade. For the EU, the agreement could remove over €4 billion annually in duties on exports, particularly benefiting sectors such as machinery, chemicals and transport equipment. Mercosur exports to the EU are expected to continue to focus on agricultural products, minerals and forestry goods.
Estimates suggest European exports to Mercosur could rise by nearly 40%, while Mercosur exports to the EU may increase by around 17%. Supporters say the agreement strengthens economic ties between Europe and South America while sending a strong signal in favour of cooperation and free trade in a fragmented global economy.