MercoPress. South Atlantic News Agency

Mercosur and EU sign historic trade agreement in Asunción after 26 years of negotiations

The signing ceremony took place at the Gran Teatro José Asunción Flores, the same venue where the founding treaty of Mercosur was signed in 1991

On January 17, 2026, the Mercosur bloc and the European Union (EU) formalized a comprehensive association and free trade agreement in Asunción, Paraguay, marking the culmination of nearly 26 years of negotiations, according to international and regional news outlets.

The signing ceremony took place at the Gran Teatro José Asunción Flores, the same venue where the founding treaty of Mercosur was signed in 1991. Leaders of Paraguay, Argentina, and Uruguay participated, alongside representatives from the EU including Ursula von der Leyen and António Costa.

Brazil’s President Luiz Inácio Lula da Silva, who played a leading role in advancing the deal, did not attend the signing ceremony, delegating his country’s representation to the foreign minister, in a move seen by observers as indicative of political tensions within Mercosur.

The pact will establish one of the largest free trade areas globally, linking Mercosur —comprising Argentina, Brazil, Paraguay and Uruguay— with all 27 EU member states, encompassing an estimated 720 million people and a combined GDP surpassing US$25 trillion.

In December 2025, the signing initially expected around the Foz do Iguaçu Mercosur summit was pushed back to January amid EU internal divisions and mounting pressure from farmers’ protests. MercoPress reported Ursula von der Leyen saying the bloc needed “a few more weeks” to settle outstanding issues with member states, while European Council President António Costa played down the delay after a quarter-century of talks.

Momentum shifted on Jan. 9, when a qualified majority of EU countries backed moving ahead despite France’s opposition. Italy’s move was pivotal, following negotiations that included a boost to the Common Agricultural Policy and “emergency brake” safeguards for sensitive products—against the backdrop of renewed farmer mobilisations, particularly in France.

On the Mercosur side, it was described a stance of “constructive patience” as EU politics delayed the timetable, while Paraguay—set to hold the rotating presidency—outlined a 2026 agenda aimed at cutting red tape and simplifying customs. Uruguay’s Foreign Minister Mario Lubetkin, meanwhile, called the EU green light an “extraordinary” breakthrough as the Asunción signing was confirmed.

Government expectations and post-signature implementation

Ahead of the signing, Uruguayan President Yamandú Orsi indicated that a key priority is initiating discussions with the EU delegation on how to implement the treaty following ratification by legislative bodies on both sides of the Atlantic. (reported by regional diplomatic sources)

Officials expect that the agreement’s economic texts and regulatory frameworks will require extensive review and consultation with domestic sectors, especially those that may face heightened competition, such as agriculture and manufacturing. (based on regional economic reporting and government communications)

Global and geopolitical context

The agreement was approved by EU member states on January 9, opening the way for the formal signing, although it still requires approval from the European Parliament and the national parliaments of Mercosur countries before it can enter into force.

For the EU, the pact represents not only a commercial milestone but also a strategic step in strengthening economic ties with Latin America, amid broader global trade tensions and efforts to diversify partnerships.

The deal includes safeguard mechanisms to address concerns from agricultural sectors in Europe, particularly after opposition from countries like France and Poland, with concessions negotiated to secure broader support.