Historic EU-Mercosur Trade Deal Seals Larger Free Trade Zone

The EU and Mercosur have signed their largest trade agreement after 25 years of talks. The deal aims to lower tariffs, foster trade, and must be ratified by EU Parliament and Mercosur members. Despite concerns over cheap imports and deforestation, it promises economic growth.

The European Union and the South American trading bloc Mercosur have formalized a landmark free trade agreement, concluding 25 years of negotiations. Signed in Paraguay, this agreement marks the EU's largest trade accord to date and seeks to slash tariffs to enhance bilateral commerce. It awaits ratification from the European Parliament and Mercosur legislative bodies, including Argentina, Brazil, Paraguay, and Uruguay.

The signing event saw participation from European Commission President Ursula von der Leyen and European Council President Antonio Costa, alongside Mercosur leaders. Notably absent was Brazilian President Luiz Inacio Lula da Silva, represented by his foreign minister. Despite last-minute concerns from agricultural and environmental groups over potential surges in low-cost South American imports and deforestation risks, the deal proceeded after gaining approval from most European countries.

Von der Leyen had met with President Lula ahead of the ceremony in Asuncion, emphasizing the deal as a defining message of fair trade and robust partnership. Encompassing a combined market of 700 million individuals, trade between the two regions was valued at 111 billion euros in 2024, highlighting an exchange of diverse goods ranging from EU machinery to Mercosur agriculture.

(With inputs from agencies.)