Top officials from the EU and the South American bloc Mercosur signed a free trade agreement on Saturday in Paraguay, paving the way for the European Union's largest ever trade accord after 25 years of negotiations.
The agreement, which has been highly contested in Europe, must now gain the consent of the European Parliament. It also must be ratified by legislatures of Mercosur members Argentina, Brazil, Paraguay and Uruguay, which is expected to be a smoother process.
The signing ceremony in Paraguay’s humid capital of Asunción marks a major geopolitical victory for the EU in an age of American tariffs and surging Chinese exports, expanding the bloc’s foothold in a resource-rich region increasingly contested by Washington and Beijing.
It also sends a message that South America cultivates diverse trade and diplomatic relations even as US President Donald Trump declares dominance in the Western Hemisphere.
European Commission President Ursula von der Leyen and European Council President Antonio Costa joined the presidents of Mercosur countries at Saturday's ceremony, with the exception of Brazilian President Luiz Inacio Lula da Silva, who sent his foreign minister.
The deal was signed after receiving the green light from most European nations last week, despite concerns from farmer and environmental groups, who fear a surge of inexpensive South American imports and increased deforestation.
Von der Leyen, who met with Lula before heading to Asuncion for the signing, said the deal would create the largest free trade zone in the world.
"This agreement sends a very strong message to the world. It reflects a clear and deliberate choice. We choose fair trade over tariffs. We choose a productive, long-term partnership over isolation," she said on Saturday.
Trade between the two blocs, which encompasses a market of 700 million people, reached a value of 111 billion euros in 2024. European Union exports mainly consist of machinery, chemical products, and transport equipment, whereas Mercosur's exports are concentrated in agricultural goods, minerals, wood pulp, and paper.
