EU and Mercosur countries sign landmark free trade deal
Published January 17, 2026last updated January 17, 2026
The European Union and South American bloc Mercosur signed a long-delayed free trade agreement on Saturday in Asuncion, Paraguay, creating one of the world's largest free trade zones.
The agreement slashes more than 90% of tariffs between the EU and the Mercosur countries of Argentina, Brazil, Paraguay and Uruguay, though some cuts will be phased in over 10 to 15 years.
European Commission President Ursula von der Leyen called the accord a “geopolitical victory,” stressing cooperation over tariffs.
"With this win-win partnership, we both stand to gain – economically, diplomatically and geopolitically. Our companies will create exports, growth and jobs," she said in her speech.
What are details of the EU-Mercosur deal and roadblocks?
The trade deal would slash tariffs with the goal of expanding goods trade that is even split. In 2024, this trade was worth €111 billion ($128.8 billion).
- The deal includes the EU's 27 member countries, although Austria, France, Hungary, Ireland and Poland voted against it
- The accord is expected to benefit EU exports such as cars, wine and cheese
- It will also provide access for South American agricultural products including beef and soybeans
- It faces opposition from some European farmers
- Opponents fear a surge of cheap imports of South American commodities and further deforestation
The agreement 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.
Why won't Lula attend the signing?
Brazil's President Luiz Inacio Lula da Silva was one of the principal forces behind the deal, skipped the signing on Saturday.
Experts say the decision may reflect Lula's frustration that the agreement was not signed in December, when Brazil held Mercosur's rotating presidency.
Ahead of the signing, however, Lula was optimistic, saying, "Tomorrow in Asuncion, we will make history by creating one of the world's largest free trade areas."
"It was more than 25 years of suffering and attempts to get a deal," he said at a press conference alongside von der Leyen.
Meanwhile, Argentina's Javier Milei and Uruguay's Yamandu Orsi were at the ceremony hosted by Paraguay's Santiago Pena.
Edited by: Roshni Majumdar, Jenipher Camino Gonzalez