ASUNCION, Paraguay (AP) 鈥� The European Union and the Mercosur bloc of South American countries formally signed a long-sought on Saturday, strengthening commercial ties in the face of rising protectionism and trade tensions around the world.
The signing ceremony in Paraguay鈥檚 capital, Asuncion, caps more than a quarter-century of torturous negotiations. It marks a major geopolitical victory for the EU in an age of American tariffs and surging Chinese exports, expanding the bloc鈥檚 foothold in a resource-rich region by Washington and Beijing.
It also sends a message that South America is keeping a range of trade and diplomatic relationships even as U.S. President Donald Trump makes an for geopolitical dominance of the .
The agreement could still face hurdles in the EU parliament, which must ratify it before it can take effect. Ratification is considered all but guaranteed in South America, where the agreement has broad support.
Mercosur consists of the region’s two biggest economies, Argentina and Brazil, as well as Paraguay and Uruguay. Bolivia, the bloc’s newest member, is not included the trade deal but could join in the coming years. Venezuela has been suspended from the bloc and isn’t included in the agreement.
Supported by South America鈥檚 cattle-raising countries and European industrial interests, the accord will gradually eliminate more than 90% of tariffs on goods ranging from Argentine beef to German cars, creating one of the world鈥檚 largest free trade zones and making shopping cheaper for more than 700 million consumers.
Leaders call deal a win over protectionism
European Commission President Ursula von der Leyen, who heads the EU鈥檚 executive branch, portrayed the deal as a bulwark against the disruptive policies of the Trump administration.
鈥淚t reflects a clear and deliberate choice: We choose fair trade over tariffs. We choose a productive long-term partnership over isolation,鈥� von der Leyen declared in an veiled rebuke of Trump at the ceremony, which got underway as Trump on eight European nations over their opposition to American control of Greenland.
鈥淲e will join forces like never before, because we believe that this is the best way to make our people and our countries prosper,鈥� she added.
The White House did not immediately respond to a request for comment.
Brazilian President Luiz In谩cio Lula da Silva, a longtime advocate of the trade deal, hailed it as a victory for global cooperation.
鈥淎t a time when unilateralism isolates markets and protectionism inhibits global growth, two regions that share democratic values and a commitment to multilateralism choose a different path,” Lula posted on X.
Final push for deal came after EU demanded more concessions for farmers
But Lula , signaling simmering tensions between the trading blocs.
Brazil, which held the rotating presidency of Mercosur last year, was gearing up to host the signing ceremony last month , demanding more scared of a surge in cheap agricultural imports.
Robbed of the spotlight, Lula was outraged at what was widely seen in South America as the latest example of the .
One of the main reasons the deal took so long to clinch was Brussels’ demands for controls on South American agricultural processes, from to rules on plastic packaging, as European farmers complained they couldn’t compete if their South American counterparts were held to lower standards.
鈥淭he EU鈥檚 maximalist wish lists of demands from developing economies willing to sign free trade agreements are often perceived as patronizing,鈥� said Agathe Demarais, a senior policy fellow with the European Council on Foreign Relations.
Some European farmers hope to block ratification
After the accord incorporated environmental regulations, strict quotas on farm imports like beef and sugar and staggered timelines for tariff reductions, the EU sweetened the deal further for its farmers with a promise of hefty subsidies. That pushed agricultural powerhouse earlier this month.
But even as the ink dried on Saturday, powerful lobbies in Europe were still hoping to prevent the agreement from clearing its main final hurdle: ratification by the European Parliament.
to the accord, with President Emmanuel Macron worrying that farmers鈥� frustration with the EU could drive more voters to in the 2027 presidential election.
In an interview, EU trade commissioner Maro拧 艩ef膷ovi膷 said he’d start lobbying Monday to get European Parliament members on board with the deal in hopes of seeing it passed in the first half of this year.
鈥淲e’ll have very intense communication with all the members on a group level, on an individual level,鈥� 艩ef膷ovi膷 told The Associated Press, expressing confidence that 鈥渆veryone will do the procedures as quickly as possible so we can benefit from this historic achievement.鈥�
艩ef膷ovi膷 didn’t name Trump, but as the U.S. threatens higher tariffs the commissioner said the accord sent the message 鈥渢hat if someone prefers and believes in high tariffs and power politics, Mercosur and European countries representing more than 700 million people clearly believe in … international law, predictability, certainty and the removing of trade barriers.鈥�
A revived Mercosur wins over skeptical Milei
The deal is a sign of the bloc’s revived relevance after years in which it was embroiled in political spats, undermined by economic crises and constrained by protectionist governments.
Perhaps most striking is the enthusaism of Argentine President Javier Milei, a radical libertarian and of Trump who for global institutions like the United Nations. Milei came to office in late 2023 with nothing but scorn for Mercosur, trashing it as a 鈥減rison,鈥� threatening to withdraw and .
But his enthusiasm for free trade overcame any skepticism of the bloc at Saturday’s ceremony.
鈥淎rgentina understands firsthand that closure and protectionism, sheltered by rhetoric rather than results, are the greatest causes of economic stagnation,鈥� he said before signing.
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DeBre reported from Buenos Aires, Argentina.
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