The European Union and the Mercosur trade bloc (Argentina, Brazil, Paraguay and Uruguay) have formally signed a free trade agreement on 17 January 2026 in Asunción, Paraguay, bringing to a close more than 25 years of negotiations. This landmark pact, once fully ratified, will create one of the world’s largest free trade zones, linking over 700 million consumers and covering around 30% of global GDP.
Under the agreement, tariffs on more than 90% of goods traded between the two blocs will be gradually eliminated. The deal is expected to boost trade in machinery, cars, chemicals, agricultural products and services, reduce costs for businesses, and strengthen economic ties across continents.
Key Highlights:
- Major tariff elimination – The deal will progressively eliminate over 90 percent of tariffs on goods traded between the EU and Mercosur, significantly boosting market access for industrial and agricultural products on both sides.
- Boost for EU exporters – EU exporters, especially in machinery, chemicals, pharmaceuticals, wine and other processed goods, benefit from lower duties and simplified customs procedures, unlocking new sales opportunities in South America.
- Agri-food access with safeguards – Mercosur producers will gain preferential access to EU markets through quota arrangements for products like beef, poultry, honey and rice, with safeguard clauses to protect EU farmers against sudden import surges.
- Protection of geographical indications – The agreement includes protection for hundreds of EU food and drink products (e.g., prosciutto, cheeses, spirits) from imitation in Mercosur markets, strengthening export value.
- Sustainability commitments – There are explicit commitments to uphold high environmental, labour and climate standards, including references to the Paris Agreement and deforestation-free supply chains.
- Services and broader cooperation – Beyond goods, the pact covers services, investment, intellectual property, public procurement and dispute settlement, providing a predictable, modern trade framework.
Next Steps and Context:
The agreement must still be ratified by the European Parliament and national legislatures in Mercosur countries before entering into force, and it comes amid efforts to strengthen geopolitical and economic ties while responding to global trade shifts.
The deal has drawn mixed reactions: it’s widely welcomed by industry and exporters, while farmers and environmental groups in Europe have voiced concerns about competition and sustainability impacts.
More information of the EU-Mercosur FTA can be found from the following link under the Council of the EU:
EU-Mercosur: Council greenlights signature of the comprehensive partnership and trade agreement