European Commissioner for Trade and Economic Security Maros Sefcovic (L) and Paraguay's Foreign Minister Ruben Ramirez Lezcano shake hands after signing documents as (L-R, back) European Council President Antonio Costa, European Commission President Ursula von der Leyen, Paraguay's President Santiago Pena and Argentina's President Javier Milei witness the moment during the signing ceremony of the trade agreement between the European Union and Mercosur, at the Gran Teatro Jose Asuncion Flores of Paraguay's Central Bank in Asuncion on January 17, 2026. LUIS ROBAYO / AFP
The European Union and the Mercosur bloc of South American countries formally signed a long-sought landmark free trade agreement on Saturday, January 17, 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 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 US President Donald Trump declares dominance in the Western Hemisphere.
