After more than 25 years of intermittent and often contentious talks, the European Union and the Mercosur bloc formally signed a sweeping free trade agreement on Saturday in Paraguay. The signing ceremony in Asuncion brought together European Commission President Ursula von der Leyen, European Council President Antonio Costa, and leaders from Argentina, Paraguay and Uruguay, while Brazil was represented by its foreign minister.

EU leaders presented the agreement as a strategic move at a time of growing global uncertainty. Von der Leyen said the deal sends a clear signal in favor of open and fair trade rather than protectionism, framing it as a long-term partnership designed to strengthen economic resilience. Costa described the agreement as a key step toward reinforcing the EU’s economic security amid rising geopolitical and trade tensions.

If fully implemented, the pact would create one of the world’s largest free trade areas, covering more than 700 million people. It foresees the gradual removal of around 90 percent of tariffs on goods and services across industrial, agricultural and service sectors over a period of 10 to 15 years. According to projections, EU exports to Mercosur could increase by 39 percent, or €48.7 billion (around BGN 95.2 billion), by 2040, while imports from the South American bloc are expected to grow by 16.9 percent, or €8.9 billion (about BGN 17.4 billion). Total trade between the two sides amounted to €111 billion (approximately BGN 217 billion) in 2024, with the EU mainly exporting machinery, chemicals and vehicles, and Mercosur supplying agricultural products, minerals and pulp.

Further reading: Bulgaria Says EU-Mercosur Deal Won’t Harm Its Economy

However, the signing has laid bare deep political rifts within the EU. On 9 January, the agreement was approved for signature by a qualified majority of 21 of the 27 member states. Austria, France, Hungary, Ireland and Poland voted against it, while Belgium abstained. Although unanimity was not required at this stage, the vote highlighted strong resistance, particularly over fears that cheaper agricultural imports from South America could undercut European farmers and concerns about environmental protection, including deforestation in the Amazon.

France has emerged as the most vocal critic. President Emmanuel Macron announced ahead of the vote that Paris would oppose the deal, citing near-universal opposition across the French political spectrum and sustained pressure from powerful farming unions. French farmers have staged large-scale protests, including tractor blockades near high-profile sites such as the Eiffel Tower and the Arc de Triomphe, accusing the government of sacrificing agriculture. Macron has argued that the agreement offers limited economic benefits for France and has pledged to seek stronger protections for farmers.

The controversy has spilled into domestic politics, with opposition parties filing no-confidence motions against the government, underscoring how divisive the issue has become.

The ratification process now enters a highly uncertain phase. The agreement must still be approved by the European Parliament, where divisions run along national and political lines and a majority is far from assured. Environmental groups and some lawmakers have raised alarms over a so-called rebalancing mechanism, warning it could constrain the EU’s ability to introduce new environmental or public health rules without compensating Mercosur partners. There is also discussion about whether the deal should be blocked from taking effect until all parties have fully ratified it, as well as the possibility of a legal challenge at the European Court of Justice, which could delay the process for months.

In contrast, approval on the Mercosur side is expected to be more straightforward. National parliaments in Argentina, Brazil, Paraguay and Uruguay are seen as likely to ratify the deal, and there are provisions allowing for provisional bilateral application as approvals are secured.

The agreement is being finalized against the backdrop of escalating global trade tensions, including recent tariff threats from the United States targeting European countries. EU leaders see the pact as a way to diversify export markets and deepen ties with Latin America. Still, with strong resistance inside the bloc, especially from France and farming groups, the future of the EU-Mercosur trade deal remains uncertain, and its political battle is far from resolved.