A landmark trade agreement between South American bloc Mercosur and the European Union will provisionally take effect May 1, creating the world's largest trade bloc encompassing $22 trillion in economic activity and 720 million people, despite fierce political opposition that nearly derailed the quarter-century negotiation.
Brazil's Vice President Geraldo Alckmin, one of the key negotiators of the agreement reached in late 2024, said Wednesday during an interview with media, including The Associated Press, at the presidential palace in Brasilia that the deal offers a counterweight to rising protectionism. "In a moment that the world much needed it, at a time of protectionism, a tough world, this gives a message that it is possible to open markets," Alckmin said.
Political Opposition and Legal Uncertainty
The deal faces significant institutional challenges in Europe. Fierce opposition by farmers and environmentalists delayed the deal in December. It then hit another wall after EU lawmakers sent the deal to the bloc's judiciary. The EU executive responded by saying it would provisionally enact the deal, which sidesteps the European Parliament. After the trade deal is implemented, it will be halted if the European Court of Justice rules against it.
The trans-Atlantic trade deal was signed Jan. 17. European Commission President Ursula von der Leyen repeatedly paid tribute to Brazilian President Luiz Inácio Lula da Silva's administration for its efforts in making the deal happen despite opposition in Europe.
Market Access and Economic Impact
Alckmin said not finishing the deal with the EU would have meant staying behind while other competitors accomplished other agreements. "It is a win-win. The societies of the Mercosur countries win, and so the 27 countries of the EU," he said, adding that he expects a boost in Brazilian exports to the EU of about 13% per year.
Brazil is by far the largest economy of Mercosur, with a gross domestic product estimated at more than $2.3 trillion in 2025. The bloc also includes Argentina, Paraguay and Uruguay.
Alckmin confirmed other potential deals with the United Arab Emirates and Canada are being negotiated, signaling Brazil's push to diversify trade partnerships.
Gradual Implementation Strategy
Alckmin said the full implementation of the deal might take up to 12 years, which he sees as key for Mercosur companies to improve productivity and quality of thousands of products. He said the fruit, beef and sugar industries of the South American bloc will be among the first to benefit but many more will over time. "It is better to do it gradually than not do it at all," Alckmin said. "This was a very well-built deal."
French President Emmanuel Macron, one of the critics of the deal, has demanded safeguards to monitor and stop large economic disruption in the EU, increased regulations in the Mercosur nations like pesticide restrictions, and more inspections of imports at EU ports.
Environmental Concerns Addressed
Alckmin rejected the accusation that Mercosur countries have less concerns about environmental preservations, as some EU farmers have said. "If there's one country that is a role model of environmental preservation, that is Brazil … Brazil reduced deforestation in 50%," he said. "So no one is too scared in either side, if there's an import boom any of the two (blocs) can ask for safeguards."
The deal gained new momentum after U.S. President Donald Trump took office last year and imposed tariffs against several countries, including Brazil. Two decades ago, Alckmin and Lula were on opposite camps in almost every issue, including the negotiations for a deal between the EU and Mercosur. While the man who was then governor of the powerful Sao Paulo state advocated for a pact with European nations, Lula did not. In 2022, the two gathered forces to unseat then-President Jair Bolsonaro, who they deemed to be a risk to Brazil's democracy. Both gravitated toward the political center. Lula made Alckmin his trade and industry minister, one of the government's key negotiators in any front. Lula's win in 2022 for a third nonconsecutive term and his bid for reelection this year did not assure the Mercosur-EU trade deal was going ahead, but the conversations gained a new momentum after Trump's tariff policies took effect.
Why This Matters:
The Mercosur-EU agreement represents a critical test of whether market-opening trade deals can survive in an era of rising protectionism and political populism. The deal's provisional implementation through executive action, bypassing elected EU legislators, raises fundamental questions about democratic accountability in trade policy. For businesses on both continents, the 12-year phase-in period provides necessary time to adapt to competitive pressures while avoiding the economic disruption that protectionist barriers create. Brazil's simultaneous pursuit of deals with the UAE and Canada demonstrates how nations are diversifying trade partnerships to reduce dependence on any single market. The agreement's success or failure will influence whether other regions pursue similar market liberalization or retreat further into protectionism, with direct consequences for global supply chains, consumer prices, and economic growth in both developed and developing economies.