EU and Mercosur Seal Trade Deal After 25 Years, Entering Ratification Phase

Overview

• Leaders and ministers signed the agreement on January 17 in Asunción, with Brazil represented by Foreign Minister Mauro Vieira as President Lula did not attend.
• The accord connects a market of about 720 million people with a combined GDP of roughly US$22 trillion.
• It eliminates tariffs on more than 90% of bilateral trade, with the EU dropping duties on about 95% of Mercosur goods within up to 12 years and Mercosur removing tariffs on roughly 91% of EU goods within up to 15 years.
• The deal requires approval by the European Parliament and the national legislatures of Mercosur members, and officials cite the possibility of provisional application of commercial provisions later in 2026.
• Binding environmental provisions allow suspension for breaches of the Paris Agreement, sensitive farm products face quotas and safeguards, and the pact meets resistance from EU farmers and several member states that opposed or abstained.