The Mercosur block of South American countries has signed a historic agreement with the European Union. This agreement has been taken after negotiations lasting more than 25 years. The Mercosur bloc has signed a historic free market agreement. This deal was done on January 17 in Asuncion, Paraguay. This agreement has been signed to further strengthen the economic relations between the two countries. There is news that Bolivia, the new member of Mercosur, can join this agreement. At the same time, Venezuela has been kept out of the block.

According to the agreement between the two sides, the tariffs will be gradually removed after 90% of the trade is completed. American countries will get access to the European market for agricultural exports like beef, poultry, sugar and soy.

In return, European companies will not face difficulties when exporting cars, machinery, chemicals, pharmaceuticals and other industrial goods to South America.

Just arrived in Asuncion, Paraguay, for a historic occasion: the signing of the EU–Mercosur Association Agreement.

In the very city where Mercosur was born back in 1991, today we take a key step to develop the world’s largest free trade area.

Breaking down barriers,… pic.twitter.com/M7fwI5dRwE

— Antonio Costa (@eucopresident) January 17, 2026

Why did the talks take so many years?
The talks started in 1990. But it was stopped due to political and economic differences. European farmers had expressed concerns about competition from cheap South American agricultural imports. At the same time, the EU had put pressure on Mercosur countries to meet strict environmental, food safety and labor standards. There were disputes over deforestation, animal welfare and production rules. Also, this deal got delayed due to continuous political changes in South America. This agreement was restarted due to the increasing tensions in global trade and the new tariffs being imposed by Donald Trump.

Today, we signed a Partnership Agreement and an Interim Trade Agreement with Mercosur.

Together, we create one of the ’s largest trade zones, covering 720 million consumers, and strengthen cooperation on economic & geopolitical issues.

https://t.co/hkqgZHtnrP#EUTrade pic.twitter.com/Jd55cHP5F1

— EU Trade (@Trade_EU) January 17, 2026

What role will this agreement play in geopolitics?

This is a very important agreement in view of geopolitics. It strengthens the EU’s presence in the resource-rich region. It is influenced by China. This is also disputed by America. On behalf of the European Commission, President Ursula von der Leyen described the agreement as a conscious decision in favor of fair trade and long-term cooperation instead of tariffs. This signals the intention to maintain diverse global partnerships.

Why are European farmers afraid of this agreement?

Farmers of European countries are opposing this agreement. Farmers of many EU countries fear that this agreement may increase imports of cheap agricultural products. This will put pressure on domestic prices and income. Will Mercosur face consent from this agreement? This deal has received widespread support in South America. There are political nuances in these also.

Brazil and Argentina support the agreement

Brazilian President Luiz Inácio Lula da Silva has long supported the agreement as a form of multilateral cooperation. Argentine President Javier Miley has also supported this agreement. Earlier Argentina was also against this support.

Why does the deal between the EU and Mercosur matter?
This deal will strengthen the largest free trade between the two countries and the entire world. This will strengthen support for open markets at a time when trade wars and economic nationalism are on the rise. It is also an example that complex trade agreements can succeed even under political pressure and that economies can be willing to commit to cooperation rather than conflict.