What Pushed European Union And Mercosur To Finally Seal A Trade Deal After 25 Years? | World News

After more than two decades of stops, starts and stalled talks, the European Union and the Mercosur bloc of South American countries have signed a comprehensive free trade agreement that will create one of the largest trade zones in the world. The agreement, signed after years of political wrangling, reflects changing global trade realities and growing concern about rising protectionism.

The agreement, signed in Asuncion, Paraguay, on January 17, aims to deepen economic ties between the two regions. Mercosur currently covers Brazil, Argentina, Paraguay and Uruguay. Bolivia, which recently joined the bloc, could be included in the agreement at a later stage, while Venezuela will remain excluded following its suspension from Mercosur.

What Does the Agreement Provide?

Once implemented, the agreement will eliminate tariffs on more than 90 percent of goods traded between the two sides, and the changes will be phased in over time.

South American exporters will gain greater access to European markets for key agricultural products including beef, poultry, sugar and soy. In return, European companies will benefit from lower barriers when selling cars, machinery, chemicals, pharmaceuticals and other industrial goods in South America.

Together, the EU and Mercosur represent a combined market of more than 700 million consumers.

Why Did the Talks Last for Decades?

Negotiations began in the late 1990s but failed repeatedly due to sharp economic and political differences.

European farmers have warned that cheap agricultural imports from South America will negatively impact domestic producers. At the same time, the EU has pressured Mercosur countries to meet stricter standards on the environment, food safety and workers’ rights.

Concerns about deforestation, animal welfare and production rules, combined with frequent political changes in South America, kept the deal in limbo for years.

Why Has the Deal Come Together Now?

This breakthrough comes against the backdrop of rising global trade tensions, particularly the renewed use of tariffs by the US under Donald Trump.

As protectionist policies gain ground, the EU has moved to diversify its trade links and strengthen rules-based trade. The agreement provides secure access to a major export market for Mercosur countries at a time of worldwide economic uncertainty.

Why is it important in terms of geopolitics?

The deal strengthens the EU’s footprint in a resource-rich region where China’s influence is growing and US interests remain strong. European Commission President Ursula von der Leyen described the agreement as a deliberate choice in favor of “fair trade over tariffs” and long-term cooperation.

For South American countries, this agreement signals a desire to maintain balanced global partnerships rather than relying excessively on any single power.

Why Are European Farmers Unhappy?

Opposition from farmers in many EU countries remains intense. They fear that an increase in low-cost agricultural imports could hurt prices and incomes, and argue that South American producers do not face equivalent environmental and labor rules.

To ease these concerns, the EU introduced quotas on sensitive products, made gradual tariff cuts and promised additional support to affected farmers. Despite this, resistance is particularly strong in countries such as France.

Where Mercosur Stands

Although political positions vary, support in South America is largely positive. Brazilian President Luiz Inácio Lula da Silva has long supported the agreement as a symbol of multilateral cooperation, even amid disagreements with the EU over regulations.

In Argentina, President Javier Milei, once a Mercosur skeptic, approved the agreement, arguing that protectionism fueled economic stagnation.

Still Must Haves

To enter into force, the agreement must be approved by the European Parliament and ratified by all Mercosur member states.

While approval is expected to be easy in South America, domestic politics and pressure from agricultural lobbies in Europe may slow or complicate the process.

Why is the agreement important?

If ratified, the EU-Mercosur pact would create one of the world’s largest free trade areas and send a strong signal in favor of open markets at a time when trade wars and economic nationalism are on the rise.

It will also test whether large, complex trade deals can still succeed under political pressure and whether major economies are willing to choose cooperation over conflict.