EU, Mercosur to sign landmark free trade deal

The European Union and the Latin American trade bloc Mercosur are expected to sign a free trade deal on Saturday, which was 25 years in the making.

European Commission President Ursula von der Leyen and European Council President Antonio Costa will visit Paraguay's capital Asunción for the signing ceremony in the hope of finally turning the page on the trans-Atlantic trade saga, CE Report quotes MIA.

The deal "will bring real benefits for European citizens and businesses, boost the EU’s sovereignty and strategic autonomy, and shape the global economy in line with our shared values" Costa said ahead of his trip.

"More than 700 million people will benefit from the EU-Mercosur Agreement," Costa said.

The EU managed to push the deal over the line despite opposition from some countries in the bloc, in an effort to diversify its trade ties as relations with the United States and China grow strained.

"Europe is open for business, and building bridges towards shared prosperity with our global partners," Costa said.

The trade deal between the EU's 27 member countries and Mercosur countries Brazil, Argentina, Uruguay and Paraguay is intended to boost trade between the economic blocs.

The negotiations, which started in 1999, repeatedly came to a standstill, including over concerns from European farmers who warned they would have to comply with differing standards.

The signing ceremony, which was initially scheduled for December, was delayed as the support for the deal among EU countries fell short of the required majority.

Last-minute concessions by the European Commission earlier this month prompted crucial backing from Italy, giving the deal the necessary support.

The European Parliament still has to approve the agreement before it can enter into force.

Signal to Trump

The new free trade area is also intended as a signal offsetting US President Donald Trump's protectionist trade policy. The aim is to dismantle trade and tariff barriers between the EU and the Mercosur states as much as possible.

German industry had been pushing for years for the deal to be concluded.

German Chancellor Friedrich Merz welcomed it as a "milestone in European trade policy and an important signal of our strategic sovereignty and ability to act."

The commission estimates that the agreement could increase annual EU exports to South America by up to 39%, or around €49 billion ($57 billion) - supporting more than 440,000 jobs throughout Europe.

In particular, the automotive industry, mechanical engineering and the pharmaceutical sector stand to benefit. Car imports to Mercosur countries are currently subject to a 35% tariff, for example.

EU lawmakers threaten to derail the trade deal

Some major EU countries, including France and Poland, and parts of Europe's farming community still view the deal critically despite the commission's concessions. These concessions include countermeasures that can be quickly initiated in the event of a harmful increase in imports from the Mercosur states or an excessive fall in prices for EU producers.

The European Parliament is set to vote on Wednesday on a resolution tabled by Leftist EU lawmakers which could significantly delay the implementation of the deal.

The motion calls on the European Court of Justice (ECJ) to give a legal assessment of the free trade agreement ahead of the EU Parliament's vote - which is in any case expected to be close.

EU lawmakers will also vote on a motion of censure against the European Commission over the EU-Mercosur agreement.

This move, however, is expected to be rejected due to the high threshold required for motions of censure to pass.