“Some build barriers, we build bridges”

The European Commissioner for Trade, Maroš Šefčovič, and the foreign ministers of the Mercosur countries, Pablo Quirno (Argentina), Mauro Vieira (Brazil), Rubén Ramírez (Paraguay) and Mario Lubetkin (Uruguay), sealed the treaty with their signatures in a event at the headquarters of the Central Bank of Paraguay (BCP), before hundreds of guests and to loud applause.

The pact will allow the two blocs, which together number 31 countries and represent about a quarter of the world economy, to reduce or gradually eliminate tariffs on around 90% of their imports and exports.

They attended the ceremony, as witnesses of honorthree of the four presidents of the countries that make up the Southern Common Market (Mercosur): Javier Miley (Argentina), Santiago Pena (Paraguay, which holds the semiannual presidency of the group) and Yangines orsi (Uruguay).

The only absentee was the Brazilian Lula da Silvaone of the great promoters of the agreement with the Europeans and who did not attend due to last-minute protocol changes.

The EU delegation was led by the president of the European Commission, Ursula von der Leyenand the president of the European Council, Antonio Costa.

Openness against unilateralism

The president of the European Council, Antonio Costaexplained during his speech that this agreement may arrive late, but it is a commitment to openness against unilateralism and the use of trade as a “geopolitical weapon.”

“This agreement is a decisive commitment to openness, exchange, cooperation in the face of isolation, unilateralism and the use of trade as geopolitical weapon“said Costa at the headquarters of the Central Bank of Paraguay.

Costa defended that with this agreement “a clear message to the world“for the defense of free trade “based on rules”, multilateralism and international law “as the basis of relations between countries and regions.”

“While some raise barriers and others violate the rules of fair competition, we build bridges where we agree on rules because we believe in fair trade, with strength, generating prosperity, employment and stability,” he added.

In that sense, he stated that the signing of the agreement is a “authentic milestone” noting that the pact will help both blocs “navigate an increasingly turbulent geopolitical environment and do so without giving up” each nation’s values.

The president of the European Commission, Ursula von der Leyenhas also added that they choose “fair trade”, instead of “tariffs”. Furthermore, like Costa, he explains that thanks to this, “opportunities, employment and prosperity” will be created.

An exit point

In addition to the interventions of the European leaders, the president of Argentina, Javier Mileyexplained that his country “does not stop at this agreement” and believes that with the signing of this pact “an exit point” is opened and the future of what was negotiated is maintained.

For his part, the president of Paraguay, Santiago Penawhose country holds the rotating presidency of Mercosur, added that “the path of dialogue, cooperation and fraternity is the only path.”

“We often use qualifiers lightly, but today that is not the case, we are facing a truly historic day that has been long awaited by our people, uniting two of the most important markets in the world: Europe and South America,” he added.

26 years of procedures

The trade war undertaken by the United States since the return of Donald Trump to the White House, the increasing dependence on China and the impacts of war conflicts in Ukraine and the Middle East have forced the parties to overcome their differences and complete the trade association.

Negotiations formally began in 2000, a general political agreement was reached in 2019, but the text was only closed on December 6, 2024.

Its signing comes amid protests by European farmers, who have demonstrated fervently against an agreement that they consider promotes unfair competition with their South American counterparts.

The competitive agricultural sector of the Mercosur countries will be one of the great beneficiaries of the pact, like the European industry, for which the doors of a South American market historically closed for products such as electrical equipment, machines and automobiles will be opened.

However, the agreement includes bilateral safeguards granting the right to intervene if a large price or volume imbalance occurs.

Despite the signature, its entry into force will not be automatic, since it still has to go through procedures on both sides of the Atlantic, although some countries, such as Brazil, hope to begin implementing it from the second semester.