With the start of 2026, the European Union has taken further steps on its stated priorities relating to competitiveness, economic growth, trade diversification, and reducing strategic dependencies. In parallel, the EU has reiterated its intention to strengthen international partnerships in response to a more uncertain global trade environment.
Following discussions at the European Council three weeks ago, the EU indicated to its Mercosur partners that it would move forward with efforts to conclude the long-negotiated trade agreement. In the intervening period, consultations were held with Member States and stakeholders. The Council has now given its approval to proceed, clearing the way for the agreement to be formally signed under the Paraguayan Presidency, which has recently begun. The process follows earlier engagement with Mercosur countries, including Brazil.
After approximately 25 years of negotiations, the EU-Mercosur agreement establishes a framework for expanded trade and cooperation between the two blocs. Once implemented, it would create a combined market of around 700 million people, covering the EU and Mercosur member states, and would represent one of the world's largest free trade areas.
From the EU perspective, the agreement is expected to affect a broad range of economic actors. Around 60,000 European companies currently export to Mercosur countries, including a large share of small and medium-sized enterprises. Under the agreement, exporters would benefit from reduced tariffs, simplified customs procedures, and improved access to raw materials. Annual savings on export duties for EU companies are estimated at around €4 billion.
The agreement also addresses concerns raised by parts of the European agricultural sector. It includes safeguard mechanisms intended to limit potential negative effects on farmers and livestock producers, alongside provisions to reinforce import controls and compliance with EU rules. At the same time, the agreement provides for the protection of 350 European geographical indications, covering agricultural and food products.
Trade flows between the two regions are expected to increase over the long term. EU exports to Mercosur are projected to grow by nearly €50 billion by 2040, while Mercosur exports to the EU could rise by up to €9 billion. The framework is also designed to support European investment in selected sectors within Mercosur countries.
Beyond trade, the agreement establishes a structured platform for political dialogue between the EU and Mercosur. This mechanism is intended to support regular engagement on shared interests and broader international issues, alongside the economic provisions of the deal.
Formal signature of the agreement is expected to take place in Paraguay, marking the next phase in EU-Mercosur relations.
© European CommissionFor more information:
Paula Pinho
European Commission
Tel: +32 2 29 20815
Email: [email protected]
www.ec.europa.eu
