UPDATE - EU, Mercosur bloc sign trade agreement in Paraguay

​​​​​​​ADDS DETAILS, STATEMENTS BY PARAGUAY, ARGENTINA, BRAZIL

By Ilayda Cakirtekin and Jorge Antonio Rocha

ISTANBUL/MEXICO CITY (AA) - The European Union and the South American Mercosur bloc signed a controversial trade agreement Saturday in Paraguay after 25 years of negotiations.

The treaty signed in Asunción brings together a market of more than 720,000 people and creates one of the largest global trade blocs, amounting to 25% of the world's GDP.

European Commission President Ursula von der Leyen and European Council President Antonio Costa participated in the signing ceremony with Mercosur, which includes Argentina, Brazil, Paraguay and Uruguay.

"Today in this room, we are signing an important document. It is basically the symbol of a new partnership between Mercosur and Europe," von der Leyen said while addressing officials.

The agreement eliminates more than 90% of tariffs on imports from both regions and, according to studies, could increase trade by 20%.

According to BBVA Research, the agreement would boost GDP in South America by several percentage points, reaching as high as 10% for small countries such as Paraguay.

Noting that the deal survived changes of government and meetings over the years, she reaffirmed that it is "creating the largest free trade zone in the world."

"This agreement sends a very strong message to the world. It reflects a clear and deliberate choice. We choose fair trade over tariffs. We choose a productive, long-term partnership over isolation, and above all, we intend to deliver real and tangible benefits to our people and our businesses," said von der Leyen.

Paraguayan President Santiago Peña joined von der Leyen’s optimism in celebrating the agreement and marked the occasion on social media.

"As a Paraguayan, I feel deep pride. This historic step will benefit millions of people around the world and reaffirms Paraguay as an actor committed to integration, cooperation, and a shared future," he wrote on X.

Argentina stressed that under the agreement, the country’s exports to Europe would grow 76% in the next five years and up to 122% in 10 years.

It said the EU represents 40% of Foreign Direct Investment in the country, being the main direct investor in Argentina.

"Lastly, it is highlighted that this Agreement reaffirms Argentina’s decision to move toward a more open and competitive economy governed by clear rules, as a necessary condition to return to growth, attract investment, and generate genuine employment," said a Foreign Ministry statement.

Absent at the signing, Brazilian President Luiz Inacio Lula da Silva, thanked von der Leyen and applauded the new stage between South America and Europe.

“A historic milestone in strengthening dialogue and understanding between the blocs, which will create mutual opportunities for employment, income generation, sustainable development, and economic progress,” Lula wrote on X.

The agreement was approved by EU member states last Friday, after more than 20 years of negotiations and delays in December caused by farmer protests and opposition from France, Ireland, Hungary and Poland.
Under the deal, tariffs on agricultural products, including beef, poultry, dairy, sugar and ethanol, will be reduced for Mercosur countries, while European industries will gain increased access to South American markets.

The treaty needs to be ratified by the European Parliament and signatory Mercosur countries. Once ratified, the agreement will take effect for countries that approve it.