EU and Mercosur sign landmark free-trade agreement in Asunción

Top officials from the European Union and Mercosur convene in Asunción to sign a long‑awaited free‑trade agreement, sealing roughly 25 years of intermittent diplomacy and technical negotiations. The ceremony takes place at the Banco Central del Paraguay, the same building where the 1991 Treaty of Asunción that founded Mercosur was signed, underscoring the symbolic weight of the accord for South American regional integration and European engagement.

European Commission President Ursula von der Leyen and EU Trade Commissioner Maroš Šefčovič sign for the EU, joined by European Council President António Costa. Mercosur leaders present the treaty for signature: Paraguay’s President Santiago Peña, Bolivia’s President Rodrigo Paz, Argentina’s President Javier Milei and Uruguay’s President Yamandú Orsi. Panama, an associated Mercosur member, is represented by President José Raúl Mulino. Brazil, which played a central role in the talks, is not represented by President Luiz Inácio Lula da Silva; its foreign minister, Mauro Vieira, signs on behalf of Brasília and is seen greeting Šefčovič during the ceremony.

Von der Leyen frames the pact as both economic and geopolitical. She tells the gathering, "We choose fair trade over tariffs, we choose a productive, long‑term partnership over isolation, and above all, we intend to deliver real and tangible benefits to our peoples and companies," adding that "when two regions like ours speak with one voice on global issues, the world will be listening." EU officials describe the agreement as the largest trade deal the bloc has concluded to date and as a strategic counterweight to rising protectionism worldwide.

Legally, the signatures mark a decisive but incomplete phase. Commission documents show that on Sept. 3, 2025, the European Commission adopted proposals for Council decisions on signature and conclusion of two parallel instruments: the EU‑Mercosur Partnership Agreement (EMPA) and an interim Trade Agreement (iTA). The iTA is designed to take effect while the EMPA completes domestic ratifications and will be repealed and replaced once the full partnership enters into force. The Commission secured internal approval for signature earlier this month, receiving the green light on Jan. 9, 2026.

Economic data underpin the political pitch for the accord. The EU was Mercosur's second‑largest trading partner in goods in 2024, with EU exports to the bloc totaling €57 billion, and EU services exports to the region amounting to €29 billion in 2023. EU materials highlight that the pact aims to create new opportunities for growth, jobs and sustainable development on both sides, while opening markets and strengthening regulatory cooperation.

Political dynamics remain complex. The deal secured majority support across the EU but faced notable opposition from some member states, including France and Poland, reflecting domestic political sensitivities around agriculture, labor and environmental standards. In Mercosur, leaders who supported the agreement presented it as a chance to attract investment and diversify ties amid global trade frictions.

Signatures in Asunción are a milestone that resets the clock on ratification campaigns in national parliaments and regional legislatures. Until the EMPA completes those domestic steps and enters into force, the interim arrangements will govern the immediate commercial relationship. If ratified, the pact would reshape trade patterns between two major economic blocs and amplify transatlantic political alignment at a time of intensifying global economic competition.