The agreement establishes a free trade area between the EU’s 27 member states and the Mercosur bloc, which comprises Argentina, Brazil, Uruguay and Paraguay.
The deal forms one of the largest trading blocs globally by removing tariffs on over 90% of EU exports and creating new opportunities for trade and investment.
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The EU stands as Mercosur’s second-largest trading partner in goods, recording exports valued at €57bn in 2024.
In services, the EU accounted for a quarter of all Mercosur trade, with exports to the region totalling €29bn in 2023.
The EU-Mercosur agreement aims to increase bilateral trade and investment flows while addressing tariff and non-tariff obstacles.
It seeks to introduce clearer regulations on issues including intellectual property rights, food safety standards, competition and regulatory practices.
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By GlobalDataThe deal also includes provisions that target shared priorities such as sustainable development, environmental protection, worker’s rights, responses to climate change and responsible business conduct.
According to figures from DG Trade, by 2040 the agreement could add €77.6bn to EU GDP and lead to a 39% rise in EU exports to Mercosur countries.
The deal grants European businesses access to over 270m consumers in South America and aims to facilitate supply chain diversification by opening up markets for goods and essential raw materials.
EU business organisations representing more than 28 industry groups have expressed support for the agreement’s signing.
They argue that it demonstrates a continued commitment to rules-based global trade at a time of heightened uncertainty, while providing fresh impetus for export and investment activity.
The agreement now awaits ratification by the European Parliament.
European Commission president Ursula von der Leyen said: “Today, two like-minded regions open a new chapter of opportunity for more than 700m citizens. With this win-win partnership, we both stand to gain – economically, diplomatically and geopolitically.
“Our companies will create exports, growth and jobs. We will support each other in our clean and digital transitions. And our signal to the rest of the world is clear: the EU and Mercosur are choosing cooperation over competition, and partnership over polarisation.”
The signing of the agreement comes despite opposition from farmers and environmental groups, citing concerns about a potential rise in low-cost South American imports and greater deforestation.
According to Al Jazeera, thousands of Irish farmers demonstrated last week against the deal, alleging that European leaders were disregarding their interests.
Meanwhile, European business associations have expressed support for the agreement’s signing and urged Members of the European Parliament to approve the deal, stating this would enable Europe’s economic growth and development to progress.
In October last year, Euratex, the body representing the European apparel and textile sector, joined 25 other European business associations in pressing for the full ratification of the EU-Mercosur Partnership Agreement.
