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View all search resultsSouth American bloc to ink long-awaited trade deal with EU
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Workers set up the stage for the signing ceremony of the agreement between the European Union and Mercosur at the Gran Teatro Jose Asuncion Flores of Paraguay's Central Bank in Asuncion on January 16, 2026. The South American bloc Mercosur and the European Union will sign a deal on Jan. 17, 2026, 25 years in the making, to create one of the world's biggest free trade areas at a time of growing protectionism and volatility. (AFP/Luis Robayo)
T
he South American trade bloc Mercosur and the European Union will sign on Saturday a deal 25 years in the making to create one of the world's largest free trade areas at a time of growing protectionism and volatility.
The long-awaited agreement comes amid the sweeping use of tariffs and trade threats by US President Donald Trump's administration, which has sent countries scrambling for new partnerships.
Together, the EU and Mercosur account for 30 percent of global GDP and more than 700 million consumers.
The treaty eliminates tariffs on more than 90 percent of bilateral trade.
The deal will favor European exports of cars, wine and cheese, while making it easier for South American beef, poultry, sugar, rice, honey and soybeans to enter Europe.
The treaty between the EU and Mercosur nations Argentina, Brazil, Paraguay and Uruguay was agreed in Brussels last week despite fierce opposition from European farmers.
They fear the deal will lead to an influx of cheaper South American products due to production standards they consider less stringent.
Some in South America are also wary about the impact of the treaty.
In Argentina, it is estimated that there could be a loss of 200,000 jobs just from the dismantling of the local automotive industry, trade and investment researcher Luciana Ghiotto told AFP.
European Commission President Ursula von der Leyen, European Council head Antonio Costa and EU Trade Commissioner Maros Sefcovic will attend the signing ceremony in Asuncion.
Paraguay's President Santiago Pena and Uruguay's Yamandu Orsi will also be present. The attendance of Argentina's leader Javier Milei is not confirmed.
Brazil's President Luiz Inacio Lula da Silva, who played a key role in driving negotiations forward, will not attend.
His office said the signing had initially been planned as a ministerial-level event, and Paraguay issued "last-minute" invites to presidents.
Von der Leyen stopped in Rio de Janeiro on Friday to meet with Lula on the way to Asuncion.
She praised Lula's role in pushing forward the negotiations, and said the deal "sends a powerful message" and shows "the power of partnership and openness. And this is how we create real prosperity."
Lula said the agreement was "very good, especially for the democratic world and for multilateralism."
The treaty is among several that countries are rushing to close in an uncertain global environment shaped by Trump's tariff threats and protectionism.
On Friday, Trump threatened to slap trade tariffs on countries that do not support his plans to take over Greenland, a territory of NATO ally Denmark.
Lula added that the partnership with the EU went "beyond the economic dimension."
"The European Union and Mercosur share values such as respect for democracy, the rule of law, and human rights," he said.
The signing of the deal comes as Latin America is still reeling from Trump's ouster and capture of Venezuelan leader Nicolas Maduro in a dramatic military operation this month.
