The European Union and the Mercosur trading bloc announce a free trade agreement that has been in the works for 25 years

MONTEVIDEO, Uruguay – The European Union and the Latin American Mercosur group have agreed on terms for a long-awaited free trade agreement, EU Commission President Ursula von der Leyen announced on Friday in Uruguay’s capital Montevideo.

The EU-Mercosur agreement aims to create one of the largest free trade areas in the world, covering over 700 million people and almost 25% of global GDP.

Similar to the free trade agreement between the United States, Mexico and Canada, its goal is to reduce tariffs and trade barriers to make it easier for companies on both sides to export goods.

Mercosur includes Brazil – the lion’s share of the bloc’s territory, economic output and population – as well as Argentina, Paraguay, Uruguay and Bolivia, the newest member. Venezuela’s membership has been suspended indefinitely.

For the Europeans, the deal is not the end of the road. France leads a group of member countries that still object to the pact, and all 27 member countries must agree to it for the agreement to come into force.

In remarks aimed at her “fellow Europeans” and perhaps those more skeptical, such as farmers in France and elsewhere, von der Leyen said it would have a positive impact on around 60,000 companies exporting to the Mercosur region .

She said they would “benefit from reduced tariffs, simpler customs procedures and preferential access to some critical raw materials. This creates huge business opportunities.”

“And to our farmers,” she said, “we hear you are listening to your concerns, and we are acting on them.” This agreement includes strong safeguards to protect your livelihoods.

Reaching an agreement has been a lengthy process, dating back to a summit in Rio de Janeiro in 1999. Negotiations quickly stalled due to differing economic priorities, tariffs, regulatory standards and agricultural policies on both sides of the Atlantic. For about a decade, the EU sought to protect its agricultural sector while Mercosur aimed to improve access to its agricultural products.

Some momentum came after 2010, when both sides focused on eliminating tariffs, although problems for agriculture remained. The culmination of this movement was a political agreement in June 2019, when negotiators announced an agreement that included provisions for tariff reductions and commitments to respect environmental standards.

Since then, both sides have been fighting to ratify an agreement. European concerns about deforestation in the Amazon, particularly during Jair Bolsonaro’s presidency in Brazil until the end of 2022, prevented an agreement.

Left-wing President Luiz Inácio Lula da Silva, Bolsonaro’s successor, initially spoke out against an agreement more than two decades ago. But since returning to power in 2023, his government has pushed for progress.

“After more than two decades, we have concluded the negotiations on the agreement,” Lula wrote on the social media platform X.

The outgoing government of Argentina, the bloc’s second-largest economy, opposed the deal, but President Javier Milei, who took office last year, has supported a deal.