South American trade bloc whose members include Brazil, Argentina, Paraguay and Uruguay.
Negotiations for a trade pact with the EU began in 1999. The deal was formally signed on January 17th 2026 in Paraguay, after more than 25 years of talks. France led opposition to the deal, joined by Poland and smaller states; Germany, northern European exporters and Spain supported it. Italy switched sides after a raise in farm subsidies.
Agriculture is a tiny part of the deal economically: a tariff cut on beef from 40–45% to 7.5% applies to only 99,000 tonnes. The real rationale is industrial and services trade, creating a free-trade bloc of more than 700m people. EU exports are estimated to be boosted by €49bn by 2040. The deal is framed as part of a "post-American transatlanticism" that helps Europe diversify supply chains and counter China's influence in Latin America.
The full partnership agreement, which includes clauses on political co-operation, requires approval by 42 national and regional parliaments in Europe. But the trade part has been split off into an interim agreement which the council need pass only by a qualified majority of EU governments. It solidifies and expands an existing commercial relationship worth about $150bn a year, removing tariffs on around 90% of trade in goods on both sides, mostly spread over 12 years.
European officials think the accord will halt China's encroachment on Europe's market share in Mercosur. For Argentina's president, Javier Milei, the agreement might make it harder for him to carry out his occasional threats to leave Mercosur. For Brazil, the EU agreement offers an alternative to the BRICS grouping.
Lula da Silva, once sceptical of free trade, has become an unlikely evangelist for openness. In his first presidency in the 2000s he raised tariffs on industrial machinery and textiles, enforced local-content rules in oil and gas and lavished subsidised credit on national champions such as Embraer, an aircraft-maker. Now he is racing to tie Brazil more tightly to the global economy through Mercosur and bilateral deals. Brazil has concluded a free-trade deal with the European Free Trade Association, is finalising one with the United Arab Emirates, and is in talks with Canada, India, Japan and Mexico.
The Ephebians made wine out of anything they could put in a bucket, and ate anything that couldn't climb out of one.