EU and Mercosur Sign Trade Pact Creating the World's Largest Free-Trade Area

Overview

• Leaders sealed the deal in Asunción after 26 years of negotiations, with Brazil represented by Foreign Minister Mauro Vieira and EU chiefs Ursula von der Leyen and António Costa attending.
• The agreement spans about 720 million people and roughly US$22 trillion in combined GDP across 31 countries.
• Tariffs will be phased out on most goods: the EU drops duties on 95% of Mercosur products within up to 12 years, while Mercosur reduces to zero on 91% of EU goods within up to 15 years, including extended schedules for electrified vehicles.
• Sensitive agriculture faces quotas and safeguards, with EU quotas near 3% of goods or 5% of value, strict sanitary rules maintained, and temporary duties allowed if markets are destabilized.
• Environmental clauses are binding, barring benefits for goods linked to illegal deforestation and permitting suspension over Paris Agreement breaches, as farmer protests and opposition in several EU states foreshadow a difficult ratification path.