European Union and Mercosur bloc of South American nations sign landmark free trade agreement

ASUNCIÓN, Paraguay (AP) — The European Union and the Mercosur bloc of South American countries formally signed a long-sought landmark free trade agreement on Saturday, capping more than a quarter-century of torturous negotiations to strengthen commercial ties in the face of rising protectionism and trade tensions around the world.

The signing ceremony in Paraguay’s humid capital of Asunción marks a major geopolitical victory for the EU in an age of American tariffs and surging Chinese exports, expanding the bloc’s foothold in a resource-rich region increasingly contested by Washington and Beijing.

It also sends a message that South America keeps diverse trade and diplomatic relations even as U.S. President Donald Trump declares dominance in the Western Hemisphere.

European Commission President Ursula von der Leyen, who head's the EU's executive branch, said that “the geopolitical importance of this agreement cannot be overstated” amid revived skepticism about the benefits of free trade.

“We choose fair trade over tariffs. We choose a productive long-term partnership over isolation,” she declared at the ceremony attended by the presidents of Mercosur members Argentina, Uruguay and Paraguay, and by the foreign minister of the trading bloc’s biggest economy, Brazil.

“We will join forces like never before, because we believe that this is the best way to make our people and our countries prosper.”

In creating one of the world’s largest free trade zones, the accord — pushed by South America's renowned cattle-raising countries and Europe's industrial sectors craving new markets for cars and machines — brings together a market of more than 700 million consumers that accounts for a quarter of global gross domestic product.

After decades of delay, the politically explosive deal still must clear one final hurdle: ratification by the European Parliament. Powerful protectionist lobbies on both sides of the Atlantic, particularly European farmers scared of the possible dumping of cheap South American agricultural imports, have long sought to scupper the agreement and could still stall its implementation.

Although the accord eliminates more than 90% tariffs on goods and services between the European and Mercosur markets, some tariffs will progressively be cut over 10-15 years and key farm products like beef will be limited by strict quotas in a bid to assuage European farmers’ fears.

Those quotas, as well as safeguard measures and generous EU subsidies to cash-strapped farmers, pushed agricultural powerhouse Italy across the line earlier this month. France, however, remains opposed to the accord.