RIO DE JANEIRO (AP) — Brazilian President Luiz Inácio Lula da Silva and European Commission President Ursula von der Leyen on Friday celebrated the expected signing of the free trade agreement between the EU and four South American countries the following day at a ceremony that Lula will not attend.
This is the first major trade agreement for Mercosur, which includes the region’s two biggest economies, Brazil and Argentina, along with Paraguay and Uruguay. The two blocs are expected to formally sign their quarter-century-in-the-making trade pact this Saturday at a ceremony in Paraguay. Bolivia, the newest Mercosur member, was not involved in negotiations but can join the agreement in the coming years.
While local media reported that Argentina’s Javier Milei and Uruguay’s Yamandú Orsi will be present at the ceremony hosted by Paraguay’s Santiago Peña, Lula decided not to make the trip to the capital Asuncion.
Instead, the Brazilian leader will be represented by Foreign Minister Mauro Vieira.
That caused some surprise, in light of Lula’s energetic efforts in favor of the deal, particularly since returning to Brazil's presidency in 2023 for a third, nonconsecutive term.
Experts say the move may hint at Lula’s disappointment the deal was not signed in December, when Brazil had the rotating presidency of Mercosur.
In Rio, Lula again pointed to how long the negotiations had taken.
“It was more than 25 years of suffering and attempts to get a deal,” Lula said during a short statement to the press at Itamaraty Palace in downtown Rio alongside von der Leyen.
But he hailed the historic nature of the pact.
“Tomorrow in Asuncion, we will make history by creating one of the world’s largest free trade areas, bringing together some 720 million people and a GDP of over $22 trillion,” he said.
The European Commission’s president paid warm tribute to Lula for his efforts in making the deal happen.
“The political leadership, the personal commitment and passion that you have shown in the last weeks and months, dear Lula, are truly second to none,” said von der Leyen.
At a late press conference in Copacabana on Friday, European Council President António Costa also said that the latest Brazilian presidency of Mercosur was crucial to advance negotiations, paving the way to its signature in Paraguay.
The significance of creating one of the world’s largest free-trade zones while U.S. President Donald Trump yanks the United States out of the international economy is not lost on the signatories.
“This is the power of partnership and openness. This is the power of friendship and understanding between peoples and regions across oceans,” von der Leyen said. “And this is how we create real prosperity — prosperity that is shared. Because, we agree, that international trade is not a zero-sum game.”
The victory for the EU and Mercosur comes at the expense of the U.S. and China, experts say, as Trump aggressively asserts American authority in the resource-rich region and Beijing uses its massive trade and loans to build influence.
The accord grants South American nations, renowned for their fertile land and skilled farmers, increased access at a preferential tax rate to Europe’s vast market for agricultural goods.
Apex, a Brazilian government investment agency, estimates that EU-bound agricultural exports like instant coffee, poultry and orange juice will rake in $7 billion in coming years.
But Lula on Friday warned that Mercosur would not limit itself to the “eternal role” of commodity exporters. “We want to produce and sell industrial goods with higher added value,” he said.
Flavia Loss, an international relations professor at Foundation School of Sociology and Politics in Sao Paulo, said that Lula’s absence on Saturday may be retaliation for the delay — another sign that Brazil and Mercosur are seeking equal terms with the EU.
“I see Lula’s absence as signaling: ‘The deal is important but we’re not going to change everything for them,’” Loss said.
While the deal is asymmetrical and economically favorable to the European Union, politically the agreement is beneficial for both parties, said Roberto Goulart Menezes, an international relations professor at the University of Brasilia.
For the European Union, which is under pressure amid Trump’s threats to seize control of Greenland, the deal shows that the group of countries is betting on the diversification of its partners and multilateralism, Goulart said, in a symbolic rebuke of Trump’s MAGA logic.
“And for Mercosur, it illustrates that the bloc is relevant, despite accusations of being insignificant and on its last legs.”
Speaking to journalists, Costa addressed criticisms that the deal favors the EU. “It's a trade deal, but it's also an investment agreement. (...) Because our policy is not, unlike the Chinese approach, to simply arrive and extract the minerals so that the added value is generated elsewhere.”
“There is no longer that post-colonial logic of going around extracting natural resources," he said.
Brazilian President Luiz Inacio Lula da Silva, right, and European Commission President Ursula von der Leyen shake hands on the sidelines of their meeting about the EU-Mercosur trade agreement in Rio de Janeiro, Brazil, Friday, Jan. 16, 2026. (AP Photo/Bruna Prado)
Brazilian President Luiz Inacio Lula da Silva, right, acknowledges the press as he shakes hands with European Commission President Ursula von der Leyen on the sidelines of their meeting about the EU-Mercosur trade agreement in Rio de Janeiro, Brazil, Friday, Jan. 16, 2026. (AP Photo/Bruna Prado)
European Commission President Ursula von der Leyen, second from left, poses for photos with Brazilian President Luiz Inacio Lula da Silva, second from right, Brazilian Foreign Minister Mauro Vieira, right, and European Commissioner for Trade and Economic Security Maros Sefcovic on the sidelines of giving joint statements after a meeting about the EU-Mercosur trade agreement in Rio de Janeiro, Brazil, Friday, Jan. 16, 2026. (AP Photo/Bruna Prado)
