After more than 25 years of talks, the European Union and the Mercosur bloc formally signed a free trade agreement on Saturday in Paraguay. The ceremony in Asuncion brought together European Commission President Ursula von der Leyen, European Council President Antonio Costa, and leaders from Argentina, Paraguay and Uruguay. Brazil was represented by its foreign minister.
EU leaders framed the deal as a strategic move during growing global uncertainty. Von der Leyen said the agreement promotes open and fair trade rather than protectionism and aims to strengthen long-term economic resilience. Costa described it as a key step in reinforcing the EU’s economic security amid rising geopolitical and trade tensions.
Trade benefits and projections
If fully implemented, the agreement would create one of the world’s largest free trade areas, covering over 700 million people. It plans to remove around 90 percent of tariffs on goods and services in industrial, agricultural and service sectors over 10 to 15 years.
Projections indicate that EU exports to Mercosur could rise by 39 percent (€48.7 billion) by 2040, while imports from South America could grow by 16.9 percent (€8.9 billion). Total trade between the blocs reached €111 billion in 2024, with the EU exporting machinery, chemicals and vehicles, and Mercosur supplying agricultural products, minerals and pulp.
Political opposition within the EU
The deal has revealed significant political divisions within the EU. On 9 January, 21 of 27 member states approved the agreement for signature. Austria, France, Hungary, Ireland and Poland voted against it, while Belgium abstained. Resistance centres on fears that cheaper agricultural imports could undercut European farmers and concerns about environmental protection, including Amazon deforestation.
France has been the most vocal critic. President Emmanuel Macron said Paris would oppose the deal, citing pressure from farmers and political opposition. French farming unions have staged large-scale protests, including tractor blockades near the Eiffel Tower and Arc de Triomphe. Macron has argued the pact offers limited economic benefits to France and pledged stronger protections for domestic agriculture.
Ratification challenges and legal concerns
The agreement now faces an uncertain ratification process. It must be approved by the European Parliament, where divisions run along national and political lines. Environmental groups have raised concerns about the rebalancing mechanism, warning it could limit the EU’s ability to introduce new environmental or public health rules without compensating Mercosur partners. Legal challenges at the European Court of Justice could also delay implementation for months.
On the Mercosur side, approval is expected to be smoother. National parliaments in Argentina, Brazil, Paraguay and Uruguay are likely to ratify the deal. Provisional bilateral application will allow some parts of the agreement to take effect as approvals are secured.
The EU-Mercosur agreement comes amid escalating global trade tensions, including recent US tariff threats targeting European countries. EU leaders see the pact as a way to diversify markets and strengthen ties with Latin America. However, strong opposition within the bloc, particularly from France and farming groups, means the future of the deal remains uncertain.
