Brazilian President, Luiz Inácio Lula da Silva, and European Commission President, Ursula von der Leyen, on Friday celebrated the expected signing of the “historic” EU-Mercosur trade deal that is expected to create one of the world’s largest free trade areas.
This is the first major trade agreement for Mercosur, which includes the region’s two biggest economies, Brazil and Argentina, along with Paraguay and Uruguay.
The free trade agreement (FTA) between the EU and four South American countries is scheduled to take place on January 17 at a ceremony in Paraguay that Lula will not attend. The Brazilian leader will be represented by his Foreign Minister, Mauro Vieira.
At the formal signing in of their quarter-century-in-the-making trade pact, Paraguay’s Santiago Peña will host the ceremony, while Argentina’s Javier Milei and Uruguay’s Yamandú Orsi will also be present. Bolivia, the newest Mercosur member, was not involved in negotiations but can join the agreement in the coming years.
Hailing the historic nature of the pact, Lula said: “Tomorrow in Asuncion, we will make history by creating one of the world’s largest free trade areas, bringing together some 720 million people and a GDP of over USD 22 trillion.”
von der Leyen was equally ecstatic, and paid warm tribute to Lula for his efforts in making the deal happen. “The political leadership, the personal commitment and passion that you have shown in the last weeks and months, dear Lula, are truly second to none,” she said.
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The accord grants South American nations, renowned for their fertile land and skilled farmers, increased access at a preferential tax rate to Europe’s vast market for agricultural goods. Apex, a Brazilian government investment agency, estimates that EU-bound agricultural exports like instant coffee, poultry and orange juice will rake in USD 7 billion in coming years.
Lula has been energetically involved in pushing the deal, particularly since returning to Brazil’s presidency in 2023 for a third, non-consecutive term. In Rio, he pointed to how long the negotiations had taken in thinly-veiled disappointment that the pact was not signed in December, when Brazil had the rotating presidency of Mercosur.
“It was more than 25 years of suffering and attempts to get a deal,” Lula said during a short statement to the press at Itamaraty Palace in downtown Rio alongside von der Leyen.
In a statement ahead of von der Leyen and European Council President António Costa’s trip to South America, the European Council also said that the latest Brazilian presidency of Mercosur was crucial to advance negotiations, paving the way to its signature in Paraguay.
“This is the power of partnership and openness. This is the power of friendship and understanding between peoples and regions across oceans,” von der Leyen said. “And this is how we create real prosperity – prosperity that is shared. Because, we agree, that international trade is not a zero-sum game.”
While the deal may irk US President Donald Trump, who has long accused Brazil and the BRICS of attempting to undermine the US dollar, Lula on Friday warned that Mercosur would not limit itself to the “eternal role” of commodity exporters.
“We want to produce and sell industrial goods with higher added value,” he said.
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