EU and Mercosur Finalize Historic Trade Agreement
ASUNCIÓN, Paraguay — After more than 25 years of complex negotiations, the European Union and the Mercosur bloc have successfully signed a significant free trade agreement. This milestone, celebrated in Paraguay’s capital, Asunción, represents a strategic victory for the EU amidst global trade tensions and rising protectionism.
This agreement notably enhances the EU’s presence in a resource-rich region that has become a focal point of competition between the United States and China. In a global context where U.S. President Donald Trump has asserted dominance in the Western Hemisphere, this move underscores South America’s commitment to maintaining varied trade and diplomatic connections.
European Commission President Ursula von der Leyen emphasized the critical geopolitical impact of the agreement during the signing ceremony, highlighting the broader debates about the advantages of free trade. Concurrently, Trump announced a 10% tariff on eight European nations, adding a layer of complexity to the ongoing trade discussions.
Von der Leyen stated, “We choose fair trade over tariffs. We choose a productive long-term partnership over isolation,” in the presence of Mercosur member presidents from Argentina, Uruguay, and Paraguay, along with Brazil’s foreign minister.
The agreement, driven by the interests of South American cattle industries and European manufacturers seeking new markets, establishes one of the largest free trade zones, potentially benefiting over 700 million consumers by lowering shopping costs. However, the deal still requires ratification by the European Parliament, a process that may be influenced by strong protectionist sentiments on both continents.
Despite removing over 90% of tariffs between the EU and Mercosur, certain tariffs will be phased out over a 10 to 15-year period, with strict quotas on key agricultural products like beef to protect European farmers’ interests. Italy’s support was secured after the EU agreed to impose these limits and provide subsidies to farmers, although France remains hesitant, with President Emmanuel Macron concerned about the potential political ramifications for the upcoming 2027 presidential election.
Brazilian international trade lawyer João Paulo Cavalcanti commented on the situation, noting, “Everything will depend on the political appetite of the European Parliament. That could clearly create an obstacle to approval.”
