Asuncion, Paraguay
AP
—
The European Union and the Mercosur bloc of South American countries formally signed a long-awaited landmark free trade agreement on Saturday, ending more than a quarter of a century of grueling negotiations to strengthen trade ties amid rising protectionism and trade tensions around the world.
The signing ceremony in Paraguay’s humid capital Asuncion marks a major geopolitical victory for the EU in an era of U.S. tariffs and a surge in Chinese exports, extending the bloc’s foothold in the resource-rich region that is increasingly a point of contention between Washington and China.
It also sends a message that South America maintains diverse trade and diplomatic ties despite US President Donald Trump’s declaration of dominance in the Western Hemisphere.
European Commission President Ursula von der Leyen, the head of the EU’s executive branch, said “the geopolitical importance of this deal cannot be overstated” amid renewed skepticism about the benefits of free trade.
“We choose fair trade over tariffs. We choose productive long-term partnerships over isolation,” he declared at a ceremony attended by the presidents of Mercosur members Argentina, Uruguay and Paraguay, and the foreign minister of Brazil, the trade zone’s largest economy.
“Now more than ever, we will work together because we believe this is the best way to help our people and our country prosper.”
The agreement, which creates one of the world’s largest free trade zones, is driven by South America’s famous livestock-producing nations and Europe’s industrial sector hungry for new markets for cars and machinery, bringing together a consumer market of more than 700 million people who account for a quarter of the world’s gross domestic product.
After decades of delays, the politically explosive deal still has to clear the final hurdle of ratification by the European Parliament. Powerful protectionist lobbies on both sides of the Atlantic, particularly European farmers who fear a possible dumping of cheap South American produce, have long sought to nullify the deal, but its implementation may still be delayed.
The deal would eliminate more than 90% of tariffs on goods and services between Europe and Mercosur markets, but some tariffs would be phased out over 10 to 15 years and major agricultural products such as beef would be capped with strict quotas to ease concerns among European farmers.
These quotas, along with safeguard measures and generous EU subsidies for cash-strapped farmers, pushed agricultural powerhouse Italy over the line earlier this month. However, France remains opposed to the deal.
