Historic EU‑Mercosur trade pact finalized after 26 years of negotiations, Lula absent

The European Union and Mercosur trade bloc of South American nations formally signed a long‑awaited free trade agreement on January 17, 2026 , in Asunción, Paraguay , concluding nearly 26 years of negotiations and creating one of the world’s largest free trade areas. The ceremony took place at the Gran Teatro José Asunción Flores , the same venue where the founding treaty of Mercosur was signed in 1991. Leaders from Paraguay, Argentina and Uruguay attended alongside European Commission President Ursula von der Leyen and European Council President António Costa . Brazil’s President Luiz Inácio Lula da Silva , who championed the deal, did not attend , delegating representation to Foreign Minister Mauro Vieira, a move interpreted by analysts as signaling political frustration over previous delays.

Mercosur, or the Southern Common Market, is a South American regional trade bloc established in 1991 to promote economic integration and the free movement of goods among its members. It comprises Brazil, Argentina, Paraguay and Uruguay, with Bolivia recently joining as a full member. The bloc represents some of South America’s largest economies and is a major global exporter of agricultural products, energy and raw materials, giving it growing strategic importance in international trade.

The agreement links the EU’s 27 member states with Argentina, Brazil, Paraguay and Uruguay, covering around 720 million people and a combined GDP exceeding USD 25 trillion (around 25 percent of global GDP). It eliminates tariffs on the majority of bilateral trade and includes provisions on political dialogue, cooperation, trade, and investment. Parts of the agreement may begin provisional application even as full ratification proceeds through the legislative bodies of both blocs.

To protect sensitive sectors, the deal contains quotas and safeguard mechanisms. For instance, 99,000 tonnes of Mercosur beef will enter the EU at a reduced duty, with deforestation‑free certification required for certain commodities. Quotas also apply to honey and rice , while other goods such as poultry, sugar, orange juice, coffee, ethanol, and soy products for animal feed will also enter at preferential tariff rates. These measures are intended to balance market liberalization with domestic agricultural concerns, but European farmers warn that the lower-cost imports could undercut local prices and threaten profitability in sectors like beef, poultry, and sugar production.

Lula and von der Leyen hailed the signing as a victory for multilateralism and stronger ties between South America and Europe. In a statement on X , Lula described the deal as a “ historic victory for multilateralism and for employment, income, and sustainable development ,” adding that it demonstrates the benefits of long-term international cooperation. He emphasized that Mercosur aims to move beyond commodity exports toward higher-value industrial goods. Von der Leyen praised Lula’s leadership, calling it “ truly extraordinary ” and said the agreement sends “a powerful message about partnership, openness, and shared prosperity.”

European farmers have continued to protest, fearing that cheaper Mercosur imports could threaten their livelihoods. French farmers staged tractor demonstrations in Paris, while Irish farmers rallied in Athlone and other regions. Leaders such as Arnaud Rousseau of France’s FNSEA warned that the deal “ lacks vision for agriculture ” and stressed the need to protect domestic producers. Irish farmer leader Pheilim Molloy urged action at the protests, saying, “ We must send a strong message to our Government and our MEPs that this deal is unacceptable ,” citing differences in environmental, animal welfare, and traceability standards between the EU and Mercosur countries. Political figures like Irish MEP Ciarán Mullooly echoed these concerns, calling on legislators to reconsider ratification.

The agreement carries broader geopolitical significance, strengthening ties between Europe and Latin America while countering influence from the United States and China in strategic sectors such as critical minerals and agricultural commodities. Analysts describe it as a step toward reinforcing Europe’s global economic autonomy and multilateral engagement.