EU and Mercosur Sign Landmark Trade Deal After 25 Years of Talks
By Cygnus | 18 Jan 2026
ASUNCIÓN — The European Union and the South American Mercosur bloc have signed a long-awaited free trade agreement after more than 25 years of negotiations, a move EU leaders framed as part of Europe’s push to deepen trade ties and diversify strategic supply chains in an increasingly protectionist global environment.
The signing ceremony took place in Paraguay’s capital Asunción on Saturday, with European Commission President Ursula von der Leyen and European Council President António Costa participating alongside leaders from Mercosur member countries.
If ratified, the agreement would create one of the world’s largest free trade zones, covering a combined market of around 780 million consumers, and would reduce tariffs across a wide range of industrial and agricultural sectors.
What the deal covers
The pact is expected to:
- expand access for European exports such as automobiles, machinery and pharmaceuticals to Mercosur markets
- improve market access for Mercosur agricultural exporters, including beef and sugar
- reduce tariff barriers on a large share of bilateral trade once implemented
EU officials have previously argued the agreement could reduce costs for European exporters through tariff savings, but the pace and scale of those gains depend on final ratification and implementation timelines.
Ratification remains the real battle
Despite the signing, the trade deal now faces a politically sensitive approval process in Europe, where farmer groups and environmental advocates have raised concerns about competition and enforcement of sustainability safeguards.
A key near-term procedural hurdle arrives January 21, when Members of the European Parliament are set to vote on whether to seek the European Court of Justice’s opinion on the agreement’s legal compatibility with EU treaties.
EU officials have also pointed out that provisional application may be legally possible before full ratification, though no final decision has been taken on that route.
Why this matters now
The EU has increasingly positioned major trade agreements as part of a broader strategy to secure access to global markets, strengthen supply chain resilience, and reduce vulnerability to geopolitical disruptions.
For Mercosur, the agreement offers a potentially significant expansion in trade access to one of the world’s largest high-income consumer markets.
Executive Summary
The EU and Mercosur signed a long-negotiated free trade agreement in Asunción on January 17, 2026, concluding more than 25 years of talks. The pact could reduce tariffs on a wide share of trade and create a market spanning around 780 million consumers. However, the agreement’s implementation depends on politically sensitive ratification steps, including a European Parliament vote on January 21 related to a possible referral to the EU Court of Justice.
FAQs
Q1) What did the EU and Mercosur sign?
They signed a free trade agreement intended to reduce tariffs and improve market access between the EU and Mercosur countries (Argentina, Brazil, Paraguay and Uruguay), subject to ratification.
Q2) Where was the deal signed?
The agreement was signed in Asunción, Paraguay, on January 17, 2026.
Q3) Does the agreement take effect immediately?
No. It still requires approvals in the EU and ratification in Mercosur countries before full implementation.
Q4) What are the biggest political obstacles?
Opposition from farmer groups and environmental stakeholders in Europe, particularly around agricultural competition and enforceability of sustainability clauses.
Q5) What happens next in Europe?
On January 21, the European Parliament is expected to vote on whether to request the European Court of Justice’s opinion on legal compatibility.