European and South American leaders say pact sends ‘clear signal’ amid concerns over global tariffs, isolationism.
Published On 17 Jan 2026
European and South American officials have signed a major free trade agreement, paving the way for the European Union’s largest-ever trade accord amid tariff threats and deepening uncertainty around global cooperation.
The deal finalised on Saturday between the 27-nation EU and South America’s Mercosur bloc creates one of the world’s largest free trade areas after 25 years of negotiations.
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The agreement, designed to lower tariffs and boost trade between the two regions, must now gain the consent of the European Parliament and be ratified by the legislatures of Mercosur members Argentina, Brazil, Paraguay and Uruguay.
“We choose fair trade over tariffs, we choose a productive long-term partnership over isolation,” EU chief Ursula Von der Leyen said at the signing ceremony in Paraguay’s capital, Asuncion.
Paraguay’s President Santiago Pena also praised the treaty as sending “a clear signal in favour of international trade” in “a global scenario marked by tensions”.
Brazilian Foreign Minister Mauro Vieira said it was a “bulwark … in the face of a world battered by unpredictability, protectionism, and coercion”.
The deal received a greenlight from most European nations last week, despite opposition from farmers and environmental groups, who have raised concerns over a surge of inexpensive South American imports and increased deforestation.
Thousands of Irish farmers protested last week against the agreement, accusing European leaders of sacrificing their interests.
But the leaders in Paraguay said the pact would bring jobs, prosperity, and opportunities to people on both sides of the Atlantic.
Together, the EU and Mercosur account for 30 percent of global GDP and more than 700 million consumers. The treaty, which eliminates tariffs on more than 90 percent of bilateral trade, is expected to come into force by the end of 2026.
The deal will favour European exports of cars, wine and cheese, while making it easier for South American beef, poultry, sugar, rice, honey and soya beans to enter Eu