Read on France 24EU and Mercosur Sign Landmark Free Trade Deal After 25 Years of Negotiations
The European Union and the Mercosur bloc of South American nations have formally signed a historic free trade agreement, culminating a quarter-century of complex negotiations. The deal, signed in Paraguay on January 17, 2026, aims to create one of the world's largest free trade zones, encompassing over 700 million consumers. While hailed by EU leaders as a victory for fair trade and partnership, the agreement faces significant opposition, most notably from France, where agricultural groups warn of threats to local farmers. The pact now moves to the crucial ratification phase by European and national parliaments.
After a remarkable 25-year journey of stop-start negotiations, the European Union and the Mercosur bloc (Argentina, Brazil, Paraguay, and Uruguay) have inked a landmark free trade agreement. The signing ceremony in Asunción, Paraguay, on January 17, 2026, marks a pivotal moment in transatlantic relations, aiming to forge one of the globe's most significant economic partnerships. However, the path to implementation remains fraught with political hurdles, as evidenced by France's continued opposition driven by powerful agricultural concerns.
The Scope and Significance of the Agreement
The EU-Mercosur deal is designed to be the European Union's largest trade accord to date. It promises to eliminate over 90% of tariffs on goods and services traded between the two economic blocs, which together represent a market of more than 700 million consumers and account for approximately a quarter of global GDP. According to reports from France 24, trade between the regions was valued at €111 billion in 2024, a figure poised for significant growth under the new framework.
Key Provisions and Economic Logic
The agreement follows a classic complementary trade model, often summarized as "cows for cars." The EU's primary exports to South America consist of machinery, chemical products, and transport equipment. In return, Mercosur nations will gain greater access to the European market for their key exports: agricultural goods, minerals, wood pulp, and paper. To address European farmers' anxieties about a flood of inexpensive imports, the deal includes strict quotas for sensitive products like beef, with some tariffs being phased out gradually over 10 to 15 years.
Political Landscape and Opposition
Despite the celebratory signing, the agreement's future is not guaranteed. It must now be ratified by the European Parliament and the national legislatures of all Mercosur member states. The most vocal opposition comes from France, which has refused to endorse the pact. The country's influential agricultural lobby has consistently warned that the agreement could severely undermine the livelihoods of local farmers, fearing competition from large-scale South American producers. This domestic pressure has kept France as a notable holdout, even as other skeptical nations like Italy were persuaded to support the deal through concessions like safeguard measures and promises of continued EU farm subsidies.
The Road Ahead
European Commission President Ursula von der Leyen framed the agreement as a strategic choice for the future. At the signing, she stated it sends "a very strong message to the world," choosing "fair trade over tariffs" and "a productive, long-term partnership over isolation." The deal also faces scrutiny from environmental groups concerned that increased demand for South American beef and soy could accelerate deforestation in critical biomes like the Amazon. The coming months will be decisive as lawmakers across two continents debate the balance between economic opportunity and the protection of domestic industries and environmental standards.
