After more than a quarter-century of debate, the European Union and the South American bloc Mercosur will today sign a sweeping agreement in Asunción, creating one of the world's largest free-trade areas.
Agreed in Brussels last week despite fierce opposition from European farmers who fear for their bottom line, the pact is finally set to be signed in the Paraguayan capital.
However, not even the historic nature of the deal has been able to unite the Mercosur’s leaders – Brazil government sources say President Luiz Inácio Lula da Silva will not attend the ceremony, despite being one of the biggest promoters of the accord.
A source said the signing was initially planned as a ministerial-level event, and Paraguay had issued "last-minute" invitations to some presidents.
President Javier Milei was expected to travel to the Paraguayan capital, according to sources in Buenos Aires.
Milei and Lula have a broken relationship. Tensions have soared further following the removal of Venezuela’s Nicolás Maduro from power by the United States.
Host president Santiago Peña and Uruguay's president Yamandú Orsi will also attend the signing.
European Commission President Ursula von der Leyen, who travelled to Rio de Janeiro on Friday, and European Council head Antonio Costa will represent the EU.
Massive new market
Together, the EU and Mercosur account for 30 percent of global GDP and more than 700 million consumers. The treaty eliminates tariffs on more than 90 percent of bilateral trade.
It is meant to favour exports of European cars, machinery, wines, and spirits to Mercosur, which will in exchange have easier access for its beef, sugar, rice, honey and soy.
The agreement has been under negotiation since 1999 between the EU and Mercosur founding members Argentina, Brazil, Uruguay, and Paraguay, which holds the bloc's rotating presidency.
Bolivia is also a member, but was not among the bloc's founders and will not be a party to the pact.
Lula, whose country held the rotating presidency of Mercosur in 2025, fought hard for the deal, which he hailed as a win for multilateralism in a world of "growing protectionism and unilateralism."
Brazil's deputy president Geraldo Alckmin said Thursday that Lula "was the one who did all the work. His leadership and perseverance were fundamental to an agreement that had been worked on for 25 years but never materialised."
Supporters in Europe see the deal as crucial to boost exports, support the continent's ailing economy and foster diplomatic ties at a time of global uncertainty.
However European farmers have protested against the deal, fearing their livelihoods will be undercut by an influx of cheap beef and other products from South America.
European doubts
The European Commission, which negotiated the text, failed to win over all member states, with heavyweight France leading an ultimately unsuccessful push to sink it.
Ireland, Poland, Hungary and Austria also voted against the accord, but this was not enough to block it after holdout Italy ultimately threw its weight behind the pact.
Argentine trade analyst Luciana Ghiotto said the agreement was essential "to show that there is a third way without tying ourselves to the United States or China" in a time of heightened unilateralism.
"It is the longest-running negotiation worldwide, and the rush to conclude it has to do with [US President] Donald Trump's administration and its massive use of tariffs," she added.
Trump has imposed tariffs on a vast array of products imported to the United States from all over the world, since he returned to the White House a year ago.
Ratification awaits
For the EU, the deal with Mercosur "is a way to shore up autonomy and a place as a significant actor internationally," said political scientist Alejandro Frenkel of Argentina's University of San Martín.
For the South American bloc, it was a rare victory at a time of "crisis and internal fragmentation" on how to deal with threats from Trump against countries such as Venezuela and Cuba.
After Saturday's signing, the pact must still be ratified by Mercosur members and the European Parliament, where a majority in favour is still not certain.
European farmers fear the deal will lead to an influx of cheaper South American products due to production standards considered less stringent.
Thousands have been protesting in France, Poland, Ireland, and Belgium in recent days.
In a bid to allay fears, the European Commission announced a crisis fund and safeguards allowing for the suspension of preferential tariffs in case of a damaging surge in imports.
– TIMES/AFP/NA
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