trade agreement

The free trade agreement between the European Union and Mercosur countries should be implemented without delay, Paraguay’s President Santiago Peña told Euronews. He warned that stalling the agreement would be a “mistake” amid rising geopolitical tensions.

The free trade pact was signed last month by the EU and Mercosur members Brazil, Argentina, Paraguay and Uruguay. However, its full ratification by the EU has been frozen after MEPs referred the agreement to the Court of Justice in Luxembourg.

“We already presented the agreement to the Congress of the Paraguayan Nation last week, and we understand that the European Union has the legal tools to implement it temporarily,” Peña said on Euronews’s flagship interview programme The Europe Conversation.

“We are working to make this happen, and we want Paraguay to be the first country to implement it.” The country currently holds the rotating pro tempore presidency of Mercosur.

Despite the judicial review, the European Commission has the prerogative to provisionally apply the deal once one or more Mercosur countries complete national ratification. While Germany, Spain, Portugal and the Nordics are pushing for the next phase, the Commission currently says no decision has yet been made.

‘Opposition rooted in ignorance’

The agreement would create a vast EU–Latin America free-trade zone, slashing tariffs on goods and services. But resistance in Europe remains fierce, with farmers and several capitals, led by Paris, warning of unfair competition from Mercosur imports.

Peña said that European opposition to the deal was rooted in “ignorance” and an outdated and stereotypical view of Latin America.

“Our countries have changed tremendously. They have developed. Human capital has grown,” Peña said. “Europe has to rediscover Latin America.”

In the interview, Peña warned that rejecting the deal would amount to a strategic blunder, as Europe can no longer rely on the United States as its default trade partner due to President Donald Trump’s unpredictable policies.

“If (MEPs) ultimately prefer not to integrate themselves into (new) markets and instead choose to retain their old alliances that today no longer work, it would certainly be a mistake,” he said.

Still, Peña credited Trump with giving the deal “the final push” after 25 years of talks.

“The world was in a state of drowsiness,” he said. “We weren’t moving, and he came along to move us all. He came to challenge what we thought was stable, and that pushed us to leave our comfort zone.”

According to Peña, one of the EU-Mercosur deal’s key advantages is its potential to counter China’s growing presence in the region and dominance of rare earth supplies.

“Europe is losing an enormous opportunity there, because if there is a region that can compete globally, it is Latin America. We have young talent, a predominantly young population, a population (of people who are) already digital natives,” he said.

“We have that tremendous abundance of natural resources, not only food that grows above the ground, but also minerals that are below the earth, which are so critical to this new technological wave. Our region has absolutely everything that Europe and the world need.”

After months of intense negotiations, the European Commission concluded on Tuesday a free-trade deal with India which sharply reduces tariffs on EU products from cars to wine as the world looks for alternative markets following President Donald Trump’s tariff hit.

The announcement was made during a high-level visit by European authorities including Commission President Ursula von der Leyen. Both countries hailed a “new chapter in strategic relations” as the two looks for alternatives to the US market.

India is currently facing tariffs of 50% from the Trump administration, which has severely dented its exports. After sealing the Mercosur deal with Latin American countries earlier this month, the EU has said it aims to speed up its trade agenda with new partners.

“We did it – we delivered the mother of all deals,” von der Leyen said after the deal was announced. “This is the tale of two giants who choose partnership in a true win-win fashion. A strong message that cooperation is the best answer to global challenges.”

Talks went down to the wire with negotiators meeting over the weekend and in the early hours of Monday. The deal says it will bolster the “untapped” potential of their combined markets but did not include politically sensitive sectors such as agriculture.

The EU’s powerful trade chief Maroš Šefčovič, who in charge of negotiating on behalf of the 27 EU member states, said Brussels aims for a fast implementation by 2027.

In an interview with Euronews from Delhi after the deal was announced, Šefčovič said the India deal showcases the EU’s new approach when it comes to trade: more pragmatic on deliverables, rather than getting stuck on political red lines.

“We resumed negotiations with a new philosophy, being very clear in saying: if this is sensitive for you, let’s not touch it,” Šefčovič told Euronews, describing the strategy as a gamechanger.

A win for European exports looking to tap Indian market

Under the agreement, the EU aims to double goods exports to India by 2032 by cutting tariffs on approximately 96% of EU exports to the country, saving around €4 billion a year in duties. At its full potential, the deal creates a market of 2 billion people.

Europe’s carmakers emerge as beneficiaries, with Indian customs duties gradually reduced from 110% to 10% under a quota system. Tariffs in sectors including machinery, chemicals and pharmaceuticals will also be almost entirely eliminated.

Wine and spirits, key exports for countries like France, Italy and Spain, will see duties reduced from 150% to around 20 to 30%. Olive oil duties will be cut to zero from 40%.

After years of tensions with EU farmers, the Commission said sensitive agricultural products had been excluded from the agreement, leaving out beef, chicken, rice and sugar.

When it comes to India, the agreement keeps trade terms on dairy and grain untouched in line with the demands of the Indian authorities, which saw it as a red line.

The Commission, which negotiated the deal on behalf of the EU’s 27 member states, said it included a dedicated sustainable development chapter “which enhances environmental protection and addresses climate change.”

The agreement does not cover geographical indications, another contentious area for negotiators, which will be addressed in a separate deal aimed at protecting EU products from imitation on the Indian market.

Deal cut under pressure from Trump’s tariffs

The timing of the deal is important as the two sides look to de-risk their economies from the threat of Trump’s tariffs.

The EU saw tariffs triple to 15% last year under a contentious deal and India is currently operating under a 50% tariff regime from Washington.

The Trump administration slapped an additional 25% duty on India last year as punishment for buying Russian oil, which India has defended citing a need for cheap energy to power a country of 1.4 billion people.

Talks between the EU and India first began in 2007 but quickly ran into hurdles.

Negotiations were relaunched in 2022 and talks intensified last year as the two sought to cushion the impact of Trump’s return to the White House.

After the deal was signed during a two-day trip on Tuesday, in which the chiefs of the Commission and the European Council were guest of honour, the EU said the deal showcases that “rules-based cooperation” remains the preferred path for the bloc – and a growing number of partners from Latin America to India.

Before the deal can be implemented, the European Council and the European Parliament will have to ratify it, which can become an arduous process.

The Commission hopes to begin implementing the agreement from January 2027.

This story has been updated with comments by Commissioner Šefčovic to Euronews. Watch online and on television.