Senior officials from the European Union and South America’s Mercosur have signed a free trade agreement in Paraguay, ending negotiations that lasted more than 25 years.
Signing Ceremony in Paraguay
European Commission President Ursula von der Leyen and European Council President Antonio Costa attended the signing ceremony.
Presidents from Mercosur member states were also present. Brazilian President Luiz Inacio Lula da Silva was represented by his foreign minister.
The agreement aims to lower tariffs and increase trade flows between the two regions. Together, they represent a market of around 700 million people.
Concerns Over Imports and Environment
Most European governments backed the deal last week. However, farming groups and environmental organizations raised concerns.
They warned that cheaper agricultural imports from South America could affect European farmers. Some groups also expressed concerns about deforestation.
Von der Leyen said the agreement would create the largest free trade zone in the world.
She added that the deal reflects a clear choice for fair trade and long-term cooperation.
Global Trade Context
The signing comes at a time of rising global trade uncertainty.
Earlier on Saturday, U.S. President Donald Trump said Washington could impose higher tariffs on several European countries in a separate dispute.
Costa said the agreement would help both regions protect economic stability while maintaining shared values.
Economic Impact
Trade between the EU and Mercosur reached 111 billion euros in 2024.
EU exports mainly include machinery, chemicals, and transport equipment. Mercosur exports focus on agricultural goods, minerals, wood pulp, and paper.
Brazil’s government said the agreement supports efforts to expand and diversify export markets. Officials also confirmed ongoing talks with the United Arab Emirates, Canada, Vietnam, and India.
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Last modified: January 18, 2026
