May 28, 2025 2:32 pm
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EU and Mercosur Finalize Landmark Free Trade Deal After Two Decades

The European Union (EU) and Mercosur, South America’s primary trade bloc, have reached a historic agreement on a free trade deal after over 20 years of negotiations. The announcement was made on Friday by European Commission President Ursula von der Leyen in Montevideo, Uruguay.
“This is a win-win agreement,” von der Leyen declared during a joint press conference with Mercosur leaders, including the presidents of Argentina and Brazil. She described the pact as a significant economic and political milestone, emphasizing its importance amidst global trends toward isolation and fragmentation.

A New Era in Trade
The deal establishes one of the world’s largest free trade zones, encompassing over 700 million people and nearly 25% of global GDP. It aims to reduce tariffs and trade barriers, facilitating exports for businesses on both sides.
Mercosur includes Brazil, Argentina, Paraguay, Uruguay, and Bolivia, though Venezuela’s membership remains suspended.
While South American leaders welcomed the agreement, resistance persists within the EU. France and other member states have voiced concerns, particularly regarding agricultural competition and environmental standards. French Trade Minister Sophie Primas remarked, “Today is not the end of the story,” signaling continued debate among EU nations.

Economic Opportunities Amidst Challenges
The agreement, which still requires approval from 15 of the 27 EU member states and a simple majority in the European Parliament, has stirred both optimism and opposition.
Von der Leyen highlighted the potential benefits for approximately 60,000 European companies exporting to Mercosur nations, emphasizing reduced tariffs, streamlined customs procedures, and better access to critical raw materials.
However, European farmers and environmental groups have criticized the deal. Farmer lobbies argue that Mercosur products fail to meet EU standards, creating unfair competition, while environmental groups like Friends of the Earth label it a “climate-wrecking” deal. Protests are planned in Brussels.

Diverging Views Across Europe
Germany and Spain have championed the deal as a pathway to greater trade diversification, especially in light of reduced access to the Russian market and concerns over dependence on China. German Chancellor Olaf Scholz praised the agreement, stating it opens a free market for over 700 million people and boosts competitiveness.
Trade and industry groups in Germany echoed this sentiment, with BDI President Siegfried Russwurm calling it a strategic step for rules-based trade amidst global fragmentation.
However, countries like Italy and Poland have expressed reservations, signaling that internal EU debates are far from over.

Looking Ahead
The agreement marks a significant step toward enhanced EU-Mercosur cooperation. Supporters argue it will not only boost economic ties but also strengthen political alliances. Yet, with key hurdles remaining, the coming months will determine whether this deal truly becomes a landmark achievement or faces further delays.

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