EU and Mercosur Poised to Seal Landmark Trade Pact After 25 Years of Talks

BY EMMANUEL OGBONNA

Brazilian President Luiz Inácio Lula da Silva and European Commission President Ursula von der Leyen on Friday hailed the imminent signing of a long-awaited free trade agreement between the European Union and the South American bloc Mercosur, calling it a historic breakthrough that will reshape economic ties between the two regions, even as Lula himself will be absent from the formal ceremony.

The agreement, expected to be signed Saturday in Paraguay, marks the first major trade pact ever concluded by Mercosur, a bloc that brings together South America’s two largest economies, Brazil and Argentina, alongside Paraguay and Uruguay. The deal has been under negotiation for more than a quarter of a century, repeatedly delayed by political shifts, environmental concerns and protectionist pressures on both sides of the Atlantic.

Bolivia, which recently joined Mercosur, did not take part in the negotiations but is expected to have the option to accede to the agreement in the coming years.

While Paraguayan President Santiago Peña will host the signing ceremony in Asunción, and Argentina’s President Javier Milei and Uruguay’s President Yamandú Orsi are expected to attend, Lula chose not to travel to the Paraguayan capital. Instead, Brazil will be represented by Foreign Minister Mauro Vieira, a decision that surprised many observers given Lula’s highly visible advocacy for the agreement since returning to office in 2023 for his third, nonconsecutive term.

Analysts suggest the absence may reflect lingering frustration in Brasília over the timing of the deal. Brazil held the rotating presidency of Mercosur late last year, and Lula had openly pushed for the agreement to be finalized and signed in December. The delay, experts say, may have dampened enthusiasm for a high-profile appearance at the final ceremony.

Speaking alongside von der Leyen at the Itamaraty Palace in Rio de Janeiro, Lula underscored the long and often difficult road to the agreement, describing the negotiations as “more than 25 years of suffering and attempts to get a deal.” Despite the setbacks, he framed the moment as a turning point for both regions.

“Tomorrow in Asunción, we will make history by creating one of the world’s largest free trade areas,” Lula said. “We are bringing together nearly 720 million people and an economy worth more than $22 trillion.”

Von der Leyen credited Lula’s leadership as decisive in overcoming the final hurdles, praising his personal involvement in recent months. She said his political will and determination were instrumental in pushing the talks to their conclusion after years of deadlock.

European officials have also acknowledged Brazil’s role in advancing negotiations during its most recent leadership of Mercosur, saying that momentum generated during that period paved the way for the agreement’s signature in Paraguay.

Beyond its economic dimensions, the pact carries significant geopolitical weight. It comes at a time when global trade relationships are under strain, with the United States pulling back from multilateral engagement and China expanding its footprint across Latin America through trade, investment and lending. For both the EU and Mercosur, the agreement signals a commitment to openness, diversification of partnerships and a rules-based international trading system.

“This is the power of partnership and openness,” von der Leyen said. “This is how we create real, shared prosperity. International trade is not a zero-sum game.”

Economically, the agreement will give South American producers improved access to Europe’s vast consumer market, particularly for agricultural goods. Mercosur countries are among the world’s most competitive exporters of farm products, benefiting from fertile land and advanced agricultural know-how. Preferential tariff treatment is expected to boost exports of items such as poultry, orange juice and instant coffee.

Brazil’s government investment agency estimates that agricultural exports to the EU could generate an additional $7 billion in revenue in the coming years as a result of the agreement.

At the same time, Lula emphasized that Mercosur does not intend to remain confined to the role of a raw materials supplier. He stressed that Brazil and its regional partners aim to expand industrial production and exports with higher added value, using the agreement as a platform to integrate more deeply into global value chains.

Some analysts interpret Lula’s decision to skip the ceremony as a subtle political signal. Flavia Loss, an international relations professor in São Paulo, said the move may reflect Brazil’s desire to assert itself as an equal partner rather than a junior player eager for European approval.

“The deal is important,” she said, “but the absence suggests Brazil is saying it will not bend over backward. It’s a message about balance and mutual respect.”

Others note that while the agreement is economically more advantageous for the European Union, it still delivers important political gains for Mercosur. Roberto Goulart Menezes, a professor of international relations at the University of Brasília, said the pact reinforces Mercosur’s relevance at a time when the bloc has faced criticism as fragmented or ineffective.

For the European Union, he added, the agreement demonstrates a strategic bet on multilateralism and diversified partnerships, offering a counterpoint to rising protectionism elsewhere. For Mercosur, it signals that the bloc remains a meaningful actor on the global stage, capable of concluding complex and far-reaching international agreements.

After decades of stalled talks and missed deadlines, Saturday’s signing is expected to close one of the longest chapters in modern trade diplomacy, setting the stage for a new era of economic and political cooperation between Europe and South America.