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 nations have signed a sweeping free trade agreement that will create one of the world’s largest trading zones. The deal, concluded after years of political wrangling, reflects shifting global trade realities and growing concern over rising protectionism.

Signed on January 17 in Asuncion, Paraguay, the agreement is designed to deepen economic ties between the two regions. Mercosur currently includes Brazil, Argentina, Paraguay and Uruguay. Bolivia, which recently joined the bloc, may be brought into the pact at a later stage, while Venezuela remains excluded following its suspension from Mercosur.

What The Agreement Delivers

Once implemented, the deal will remove tariffs on more than 90 percent of goods traded between the two sides, with changes 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 exchange, European companies will benefit from lower barriers when selling cars, machinery, chemicals, pharmaceuticals and other industrial goods across South America.

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

Why Did Talks Drag On For Decades

Negotiations began in the late 1990s but repeatedly broke down over sharp economic and political differences.

European farmers warned that cheaper agricultural imports from South America could undercut domestic producers. At the same time, the EU pressed Mercosur countries to meet tougher standards on the environment, food safety and labor rights.

Concerns over deforestation, animal welfare and production rules, combined with frequent political shifts in South America, kept the agreement in limbo for years.

Why Deal Came Together Now

The breakthrough comes against the backdrop of growing global trade tensions, particularly the renewed use of tariffs by the United States under Donald Trump.

As protectionist policies gained ground, the EU moved to diversify its trade links and strengthen rules-based commerce. For Mercosur countries, the agreement offers secure access to a major export market at a time of economic uncertainty worldwide.

Why It Matters Geopolitically

The deal bolsters the EU’s footprint in a resource-rich region where China’s influence has expanded, 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 nations, the pact signals a desire to maintain balanced global partnerships rather than rely too heavily on any single power.

Why European Farmers Remain Unhappy

Opposition from farmers in several EU countries remains intense. They fear a surge 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, gradual tariff cuts and pledged additional support for affected farmers. Despite this, resistance is particularly strong in countries such as France.

Where Mercosur Stands

Support within South America is largely positive, though political positions vary. Brazilian President Luiz Inacio Lula da Silva has long backed the agreement as a symbol of multilateral cooperation, even amid disagreements with the EU over regulations.

In Argentina, President Javier Milei, once skeptic of Mercosur itself, has endorsed the deal, arguing that protectionism fuels economic stagnation.

What Still Needs To Happen

Before the agreement can take effect, it must be approved by the European Parliament and ratified by all Mercosur member states.

While ratification in South America is expected to be straightforward, domestic politics in Europe and pressure from farming lobbies could slow or complicate the process.

Why the Deal Matters

If approved, the EU-Mercosur pact would form 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 agreements can still succeed under political pressure, and whether major economies are willing to choose cooperation over confrontation.