EU and Mercosur Sign Historic Trade Deal

The European Union (EU) and the South American trade bloc Mercosur formally signed a free trade agreement on 17 January 2026 in Asunción, Paraguay, concluding more than 25 years of negotiations and creating one of the world’s largest free trade zones.

Agreement Aims and Market Size
The pact is designed to lower tariffs and boost trade between the EU and Mercosur, covering a market of over 700 million people and a combined economy worth around 20–25% of global GDP.

Next Steps for Ratification
While the agreement has been signed, it must now be approved by the European Parliament and ratified by the national legislatures of Mercosur member states — Argentina, Brazil, Paraguay, and Uruguay — before it can enter into force.

Mercosur Background
Mercosur, the Southern Common Market, was established in 1991 and comprises Argentina, Brazil, Paraguay, and Uruguay as full members. Venezuela’s membership is suspended, and Bolivia’s accession is pending ratification, meaning it is not yet part of the current deal.