SAO PAULO – A significant milestone has been reached with the provisional activation of the trade deal between the South American trade bloc Mercosur and the European Union, as of Friday. This ambitious agreement establishes a trans-Atlantic market valued at an astounding $22 trillion, catering to 720 million prospective customers. By 2038, some countries anticipate a surge in exports exceeding 10%, assuming the deal is fully operational.
The landmark agreement was initially signed on January 17 during a gathering of the South American consortium. In a strategic move, European Commission President Ursula von der Leyen provisionally implemented the accord, circumventing the European Parliament. However, this decision faces legal scrutiny as EU lawmakers challenge it in the bloc’s judiciary. Should the court rule against it, the agreement’s enforcement will be halted.
President von der Leyen expressed optimism about the deal, highlighting its benefits. “This is good news for EU businesses of all sizes, good news for our consumers, and good news for our farmers, who will gain valuable new export opportunities, with full protection for sensitive sectors,” she remarked on Thursday.
On Friday, von der Leyen is scheduled to engage in a videoconference with leaders from Mercosur nations, including Brazil, Argentina, Uruguay, and Paraguay, to commemorate this significant achievement.
Earlier this week, Brazil’s President Luiz Inácio Lula da Silva, a staunch advocate of the agreement, took a decisive step by signing a decree that ratifies the deal within his nation. He framed this move as a strategic response to the unilateral tariffs imposed by former U.S. President Donald Trump last year, underscoring the importance of multilateralism.
During a celebratory event in Brasilia, Lula expressed his commitment to global cooperation, stating, “Nothing better than believing in the exercise of democracy, in multilateralism, and in cordial relations between nations.” This momentous occasion marks the culmination of over 25 years of negotiations.
Last week, Brazil’s vice president and one of the negotiators of the deal, Geraldo Alckmin, said in an interview with The Associated Press and other news agencies that not striking the deal with the EU would have meant staying behind while competitor nations made other agreements.
Brazil is by far Mercosur’s largest economy, with a gross domestic product estimated at over $2.3 trillion in 2025.
Lia Valls, an associate researcher at the think-tank Fundacao Getulio Vargas based in Rio de Janeiro, agrees that the deal offers better perspectives against unilateralism worldwide.
“The EU and Mercosur are showing that it is possible for big blocs to reach a deal in this world where that multilateral system is being very weakened and where the U.S. clearly operates to do that,” Valls told the AP. “It is a very positive sign.”
The agreement faced opposition from European farmers and environmental groups and was delayed in December, before being referred to the EU’s top court.
South American agribusiness industries, chiefly beef, fruit and minerals, are expecting a boost in exports to Europe. European automakers, pharmaceutical companies and technology firms also look forward to making new inroads in Mercosur markets.
While companies based in Mercosur countries have expressed fear of tough competition from European peers in hi-tech industries, European farmers have shown concerns about price pressures and imports that do not follow similar environmental standards.
French President Emmanuel Macron, one of the critics of the deal, has long demanded safeguards to monitor and stop large economic disruption in the EU, increased regulations in the Mercosur nations like pesticide restrictions, and more inspections of imports at EU ports.
The agreement gradually removes trade barriers and tariffs in the two blocs, but it also keeps economic safeguard clauses for European countries to protect some sectors from excessive competition, such as poultry, beef, sugar, and fruit.
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