EU-Mercosur trade deal provisionally enters into force after 25 years of negotiations
Primary region South America
Tags Diplomacy · Political economy
Regions Europe · South America
The EU-Mercosur Interim Trade Agreement provisionally entered into force on May 1, 2026, after 25 years of negotiations, creating one of the world's largest free trade areas covering 720 million consumers and an estimated $22 trillion in value. The deal was signed on January 17 in Paraguay. European Commission President Ursula von der Leyen provisionally enacted it, sidestepping the EU Parliament, which is being challenged by EU lawmakers at the bloc's judiciary. Immediate tariff elimination applies to key EU agri-food exports including sparkling wines, fruit, vegetable oils, and pet food; staged liberalization over 4-15 years applies to most other products. Brazil's President Lula signed a decree validating the deal, calling it a response to unilateral US tariffs and a reaffirmation of multilateralism. The deal faces opposition from European farmers — thousands of Irish farmers protested in January — and environmental groups concerned about deforestation. Argentina, Brazil, Paraguay, and Uruguay are the Mercosur signatories.
Strategic interpretation
The deal's provisional application despite legal challenges and parliamentary opposition reflects the EU's urgency to diversify trade partnerships amid US tariff uncertainty. Lula's explicit framing of the deal as a counterweight to US unilateralism positions Brazil as a leader of the Global South's push for multipolar trade architecture. The legal challenge at the EU judiciary creates uncertainty — if struck down, it would be a significant setback for both blocs' trade ambitions and for Lula's diplomatic credibility.