Quick overview

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The long-awaited trade agreement between the European Union and Mercosur officially entered into force today, marking a historic step toward the creation of one of the world’s largest free-trade areas.

The pact — finalized in January after more than 25 years of intermittent negotiations — aims to eliminate tariffs on roughly 90% of trade flows between the two blocs. Together, the EU and Mercosur account for nearly 30% of global GDP and represent a combined market of more than 700 million consumers.

Tariffs Begin Falling Across Key Industries

European Commission President Ursula von der Leyen welcomed the start of the agreement’s implementation, stating on X that “the provisional application will demonstrate the tangible benefits of the agreement.”

“From now on, tariffs begin to fall,” she said, adding that European companies are now gaining access to new markets.

To commemorate the launch, von der Leyen and António Costa were scheduled to hold virtual talks with Mercosur leaders, including representatives from Argentina and Brazil.

Winners and Losers of the Deal

The agreement is expected to boost European exports of automobiles, wine, and cheese while expanding South American access to European markets for beef, poultry, sugar, rice, honey, and soybeans.

France unsuccessfully attempted to block the deal amid concerns from local farmers, who feared competition from lower-cost agricultural products coming from Brazil and Argentina.

France’s strong opposition also triggered public tensions with Germany, whose export-driven economy strongly supports the agreement. German Foreign Minister Johann Wadephul praised the pact’s implementation on social media Friday, saying it would “strengthen resilience and rules-based trade.”

A Broader Global Trade Strategy

Alongside the Mercosur agreement, the EU has also accelerated negotiations with other major economies, including India, Australia, and Indonesia, as part of a broader effort to diversify trade partnerships and reinforce global supply chains.

The agreement also includes provisions covering tariff reductions, preferential quotas, and a regulatory framework designed to encourage cross-border investment between the two regions.