EU seals contentious trade deal with Mercosur countries
After 25 years of talks, the EU signed the EU-Mercosur trade deal on Saturday, creating a 700 million-person free-trade area. Ratification is still pending, however, with the European Parliament set for a heated debate.
EU chief Ursula von der Leyen on Saturday hailed the choosing of "fair trade over tariffs" as the European bloc signed a major trade deal with South America's Mercosur nations that has been 25 years in the making.
"We choose fair trade over tariffs, we chose a productive long-term partnership over isolation," Von der Leyen said at the ceremony in Asuncion, Paraguay.
European Council head Antonio Costa said the deal sent "a message of defense of free trade, based on rules, of multilateralism and international law as the basis for relations between countries and regions."
He said it stood in contrast to "the use of trade as a geopolitical weapon."
Negotiated over 25 years, the Mercosur agreement would create a free-trade zone of roughly 700 million people, gradually eliminating about 90% of tariffs across the industrial, services and agricultural sectors. The European Commission estimates that EU companies would save more than €4 billion a year in customs duties. Mercosur countries have also pledged to open their public-procurement markets to European firms on the same terms as domestic competitors
The deal provides for the recognition of 344 “geographical indications”, protecting European products from imitation, and is also intended to secure supplies of critical minerals, reducing the EU’s dependence on China.
The agreement has crystallised divisions within the bloc.
Supporters - led by Germany and Spain - argue the EU needs new trade ties as the US closes its market and China pursues an increasingly aggressive trade policy. Opponents, spearheaded by France, say the deal threatens European farmers by exposing them to unfair competition from Latin American imports.
The ball is in the European Parliament's court
Paris ultimately failed to assemble a blocking minority to stop the signing, losing the decisive support of Italy at the last minute. Rome backed the deal after securing funding for its farmers from 2028 and an exemption from the EU’s carbon border tax on fertilisers.
Despite opposing the agreement, France secured a safeguard clause allowing tariffs to be reintroduced if imports from Mercosur rise by more than 5% in sensitive sectors.
The deal also caps tariff-free access for key agricultural products. Annual beef imports will be limited to 99,000 tonnes at a reduced tariff of 7.5%, equivalent to 1.5% of EU production. Poultry imports will be capped at 180,000 tonnes a year, or 1.3% of EU output.
According to Commission estimates, EU exports to Mercosur countries are expected to rise 39% (€48.7 billion) by 2040, while imports from Latin America would increase 16.9% (€8.9 billion).
However, as French President Emmanuel Macron wrote on X last week, “the signing of the agreement does not mark the end of the story.”
With the deal now signed, the ball is in the European Parliament’s court. Ratification requires lawmakers’ consent, and MEPs remain split largely along national lines, even as supporters hope backing from EU governments will sway undecided colleagues.
Opponents are set to test that support as early as next week, when lawmakers vote on a resolution calling for the agreement to be challenged before the EU’s top court.
By AFP
January 17, 2026
The treaty will favor European exports of cars, wine, and cheese, while making it easier for South American beef, poultry, sugar, rice, honey, and soybeans to enter Europe
MartÃn RASCHINSKY
The South American trade bloc Mercosur and the European Union will sign on Saturday a deal 25 years in the making to create one of the world’s largest free trade areas at a time of growing protectionism and volatility.
The long-awaited agreement comes amid the sweeping use of tariffs and trade threats by US President Donald Trump’s administration, which has sent countries scrambling for new partnerships.
Together, the EU and Mercosur account for 30 percent of global GDP and more than 700 million consumers.
The treaty eliminates tariffs on more than 90 percent of bilateral trade.
The deal will favor European exports of cars, wine and cheese, while making it easier for South American beef, poultry, sugar, rice, honey and soybeans to enter Europe.
The treaty between the EU and Mercosur nations Argentina, Brazil, Paraguay and Uruguay was agreed in Brussels last week despite fierce opposition from European farmers.
They fear the deal will lead to an influx of cheaper South American products due to production standards they consider less stringent.
Some in South America are also wary about the impact of the treaty.
In Argentina, it is estimated that there could be a loss of 200,000 jobs just from the dismantling of the local automotive industry, trade and investment researcher Luciana Ghiotto told AFP.
– ‘A powerful message’ –
European Commission President Ursula von der Leyen, European Council head Antonio Costa and EU Trade Commissioner Maros Sefcovic will attend the signing ceremony in Asuncion.
Paraguay’s President Santiago Pena and Uruguay’s Yamandu Orsi will also be present. The attendance of Argentina’s leader Javier Milei is not confirmed.
Brazil’s President Luiz Inacio Lula da Silva, who played a key role in driving negotiations forward, will not attend.
His office said the signing had initially been planned as a ministerial-level event, and Paraguay issued “last-minute” invites to presidents.
Von der Leyen stopped in Rio de Janeiro on Friday to meet with Lula on the way to Asuncion.
She praised Lula’s role in pushing forward the negotiations, and said the deal “sends a powerful message” and shows “the power of partnership and openness. And this is how we create real prosperity.”
Lula said the agreement was “very good, especially for the democratic world and for multilateralism.”
The treaty is among several that countries are rushing to close in an uncertain global environment shaped by Trump’s tariff threats and protectionism.
On Friday, Trump threatened to slap trade tariffs on countries that do not support his plans to take over Greenland, a territory of NATO ally Denmark.
Lula added that the partnership with the EU went “beyond the economic dimension.”
“The European Union and Mercosur share values such as respect for democracy, the rule of law, and human rights,” he said.
The signing of the deal comes as Latin America is still reeling from Trump’s ouster and capture of Venezuelan leader Nicolas Maduro in a dramatic military operation this month.
Brazil, EU hail trade deal as victory for multilateralism
By AFP
January 16, 2026
President of the European Commission Ursula von der Leyen praised Brazil's President Luiz Inacio Lula da Silva for his role in negotiating the EU-Mercosur deal
Fran BLANDY
Brazil’s President Luiz Inacio Lula da Silva and EU chief Ursula von der Leyen on Friday hailed a trade deal between the EU and South America’s Mercosur bloc as a victory for multilateralism at a time of global volatility.
The pair met in Rio de Janeiro on the eve of the signing of the deal, which has been 25 years in the making and will create one of the world’s largest free trade areas.
Lula said the signing of the deal in Asuncion, Paraguay on Saturday was “very good, especially for the democratic world and for multilateralism.”
Von der Leyen praised Lula’s role in pushing forward the negotiations, and said the deal “sends a powerful message” and shows “the power of partnership and openness. And this is how we create real prosperity.”
The deal is among several that countries are rushing to close in an uncertain global environment shaped by US President Donald Trump’s tariff threats and protectionism.
On Friday, Trump threatened to slap trade tariffs on countries that don’t support his plans to take over Greenland, part of the territory of NATO ally Denmark.
Lula added that the partnership with the EU went “beyond the economic dimension.”
“The European Union and Mercosur share values such as respect for democracy, the rule of law, and human rights.”
The signing of the deal comes as Latin America is still reeling from Trump’s ouster and capture of Venezuelan leader Nicolas Maduro in a dramatic military operation.
– Angry EU farmers –
Together, the EU and Mercosur account for 30 percent of global GDP and more than 700 million consumers.
The treaty eliminates tariffs on more than 90 percent of bilateral trade.
This will favor European exports of cars, wine, and cheese, while making it easier for South American beef, poultry, sugar, rice, honey, and soybeans to enter Europe.
The deal between the EU and Mercosur nations Argentina, Brazil, Paraguay and Uruguay, was agreed in Brussels last week despite fierce opposition from European farmers.
They fear the deal will lead to an influx of cheaper South American products due to production standards considered less stringent.
Von der Leyen will head to Asuncion in Paraguay for the signing ceremony, which Lula will not attend. His office said the signing had been initially planned as a ministerial-level event, and Paraguay issued “last-minute” invites to presidents.
In addition to host president Santiago Pena, Uruguay’s president Yamandu Orsi will also attend the signing.
The attendance of Argentina’s leader Javier Milei is not confirmed.
– Global trade deals –
Von der Leyen said it was important for her to meet with Lula before the signing, highlighting his role in the negotiations, which he made a priority of his third term in office.
“You are a leader deeply committed to the values we hold dear, democracy, the rules-based international order and respect. This is the leadership we need in today’s world.”
Lula said Brazil was also working on trade partnerships with Canada, Mexico, Vietnam, Japan and China.
Meanwhile, the EU is working on a trade deal with India, the world’s most populous nation with 1.4 billion people, whose relations have soured with Washington due to punishing tariffs.
Geopolitical tensions are also rising over strategic minerals, with Trump insisting the United States needs access to Greenland’s critical raw materials, which are largely unmined.
Von der Leyen said the EU and Brazil were also “moving towards a very important political agreement on critical raw materials” such as lithium, nickel and rare earths that “tend to become an instrument of coercion.”
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