Paraguay Ratifies Mercosur-EU Trade Deal, Paving Way for Provisional Application

After more than 25 years of negotiations, the Mercosur bloc has completed the ratification of its trade agreement with the European Union. The final step came when Paraguay’s parliament approved the treaty, following earlier ratifications by Argentina, Uruguay, and Brazil. This move clears the way for provisional application of the agreement while it awaits final approval from the European Parliament.

The agreement, signed on January 17 in Asunción, creates one of the world’s largest free trade areas. It covers a market of about 720 million people and a combined economy estimated at $22 trillion. The deal will liberalize most trade between the two regions and allow over 90% of Mercosur exports to enter the EU without tariffs.

Uruguay and Argentina were first to ratify the treaty in their parliaments, describing it as a key step for integrating their economies internationally. Brazil followed with a legislative decree approved by Congress and promulgated in a joint session attended by government officials. Brazilian Vice President Geraldo Alckmin said provisional entry into force could happen within months, allowing some tariff reductions to begin before full ratification in Europe.

For provisional application, both sides must complete formal procedures, including exchanging diplomatic notes. Paraguay acts as depositary for Mercosur, so Brussels must send a note to Paraguay, while each Mercosur country must notify the European Commission. Once this process is finished, parts of the agreement can take effect provisionally from the first day of the second month after notification.

Full implementation depends on ratification by the European Parliament. Before voting, lawmakers are waiting for an opinion from the European Court of Justice on whether the agreement complies with EU treaties.

The pact covers trade in goods and services and includes commitments on investment, public procurement, sanitary standards, and regulatory cooperation. In agriculture—a sector where Mercosur countries are highly competitive—99% of trade will be liberalized, with immediate removal of tariffs on many products.

For Mercosur nations, this is an opportunity to expand access to one of the world’s largest markets and diversify exports. For the EU, it means strengthening economic ties with Latin America and gaining access to a region rich in natural resources and growing energy and agribusiness potential.

The wine and spirits sector stands out as a major beneficiary. European producers, especially from Spain, will gain easier access to Mercosur markets where high import tariffs have limited their competitiveness. In Brazil, taxes on imported wine can exceed 20%, making European products expensive compared to local or Chilean alternatives. The gradual elimination of these tariffs will allow European wines and spirits to reach South American consumers at more competitive prices.

The agreement also provides strong protections for geographical indications. Names like Rioja, Cava, and Jerez will be legally protected in Mercosur countries, preventing misuse by local producers and ensuring only authentic products use these labels. This legal certainty is important for European companies investing in brand promotion and distribution in South America.

Customs procedures will be simplified under the new framework, reducing bureaucratic delays and logistical costs for exporters. This should make shipments faster and more predictable—a key factor for maintaining product quality during transport and meeting demand from importers and distributors.

Producers of spirits such as brandy and liqueurs also stand to benefit from improved market access. With traditional markets in Europe and North America reaching maturity, South America offers new growth opportunities for these industries.

The agreement is set to enter into force in 2026 if all parties ratify it. It provides for a phased reduction of tariffs on wines, beers, and spirits exported from Europe to Mercosur countries. In return, some Mercosur alcoholic beverages will gain preferential access to the EU market.

Technical cooperation is another feature of the deal. Both sides have agreed to work together on harmonizing labeling standards and commercial practices, which should reduce administrative costs and facilitate smoother trade flows.

For Mercosur countries, gaining access to the EU’s large consumer market could boost their own exports of agricultural products and beverages. For Europe’s wine and spirits sector, the agreement offers a more stable environment for planning sales strategies and diversifying export destinations at a time when global consumption patterns are shifting.

As ratification processes move forward in 2026, industry stakeholders on both sides are preparing for changes that could reshape their international business strategies for years to come.