The European Union and the Latin American trade bloc Mercosur signed a contested and long-awaited free trade agreement in Asunción on Saturday.
The deal paves the way for one of the world’s largest free trade areas, covering more than 700 million people and a combined economic output of around $22 trillion.
The agreement between the EU’s 27 member countries and Mercosur countries Brazil, Argentina, Uruguay and Paraguay is intended to boost trade between the economic blocs.
The deal, some 25 years in the making, was inked by European Commission President Ursula von der Leyen and European Council President António Costa in Paraguay’s capital.
Von der Leyen said the agreement will benefit both economic blocs.
«With this win-win partnership, we both stand to gain – economically, diplomatically and geopolitically. Our companies will create exports, growth and jobs,» she said in her speech.
«We will support each other in our clean and digital transitions. And our signal to the rest of the world is clear: the EU and Mercosur are choosing cooperation over competition, and partnership over polarization.»
Other attendees at the ceremony at the Central Bank in the Paraguayan capital included Argentinian President Javier Milei, Paraguay’s President Santiago Peña and Uruguayan President Yamandú Orsi.
The ceremony, initially scheduled for December, was delayed as the support for the deal among EU countries fell short of the required majority.
Last-minute concessions by the European Commission earlier this month prompted crucial backing from Italy, giving the deal the necessary support.
The European Parliament still has to approve the agreement before it can enter into force.
Signal to Trump
The new free trade area is also intended as a signal offsetting US President Donald Trump’s protectionist trade policy. The aim is to dismantle trade and tariff barriers between the EU and the Mercosur states as much as possible.
The deal was inked within hours of Trump announcing fresh tariffs on eight European countries over their stance on Greenland.
Washington will impose a 10% tariff on imports from the eight European countries from February 1, Trump said in a post on Truth Social on Saturday.
Citing disagreements over Greenland, which he wants to own, Trump said the tariff will apply to all goods sent to the US from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland.
The levy is set to rise to 25% from June 1 and will remain in place «until such time as a Deal is reached for the Complete and Total purchase of Greenland,» Trump said.