Mercosur–EU trade pact clears South America after Paraguay approval

Paraguay has become the final South American nation to ratify the landmark agreement between Mercosur and the European Union, concluding nearly 25 years of negotiations and advancing one of the world’s largest trade pacts.

The deal covers a market of nearly 780 million people and about 25 percent of global GDP. Paraguay’s lower house approved it unanimously after Senate backing, and it now awaits the signature of President Santiago Peña. With this, all founding Mercosur members, Argentina, Brazil, Uruguay and Paraguay have completed ratification, closing the process on the South American side.

The agreement aims to eliminate over 90 percent of tariffs, potentially removing around €4 billion in duties and boosting trade in sectors such as machinery, vehicles, and agriculture. Supporters say it will deepen economic integration and open vast export opportunities across both regions.

Focus now shifts to Europe, where the European Commission plans provisional implementation , allowing parts of the pact to take effect while a legal challenge proceeds before the European Court of Justice. This could see the agreement begin operating by mid-2026, even as full ratification remains pending.

However, the deal faces strong opposition within Europe, particularly in France, where farmers’ groups warn of cheaper imports and unfair competition. Critics also raise environmental concerns , including deforestation risks and differing production standards.

Key leaders, including Ursula von der Leyen and Luiz Inácio Lula da Silva, have backed the pact as a strategic trade pact to strengthen global ties amid shifting economic dynamics.

Despite the milestone, challenges remain within Mercosur, including logistical bottlenecks and regulatory gaps that could slow benefits. With South American ratification complete , the agreement now enters a critical phase shaped by legal scrutiny, political resistance, and the test of real-world implementation.