The European Union (EU) and the Mercosur bloc of South American nations have signed a historic free trade agreement, ending over 25 years of negotiations. The deal, finalized on January 17, 2026, in Paraguay, aims to strengthen economic ties and create one of the world’s largest trade zones, connecting more than 700 million people.
Mercosur consists of Argentina, Brazil, Paraguay, and Uruguay. Bolivia is not included in the agreement, and Venezuela remains suspended from the bloc. Under the deal, most tariffs on goods like cars, machinery, and chemicals will be gradually removed. The agreement is expected to lower costs for consumers and save businesses billions in customs duties.
European Commission President Ursula von der Leyen described the pact as a step for “fair trade over tariffs,” highlighting its importance for Europe’s global trade. Argentina’s President Javier Milei welcomed the deal as a boost for trade and economic growth.
Before it comes into effect, the agreement must be approved by the European Parliament and the national legislatures of Mercosur countries. Some European farmers and environmental groups have raised concerns that cheaper imports could harm local agriculture and contribute to environmental damage, including deforestation. The agreement includes quotas and safeguards to address these issues, and the EU has promised support to its farming sector.
