Lula, on the approval of the European Union-MERCOSUR Agreement: “A historical day for multilateralism”

“A historical day for multilateralism.” This was how Brazilian President Luiz Inácio Lula da Silva defined the approval, by a qualified majority of the European Union member states, of the Partnership Agreement between MERCOSUR and the European bloc, signed on Friday (9). The agreement creates one of the world’s largest free trade areas, consolidating the integration between two of the major global economic blocs. It also reaffirms Brazil’s role in the defense of dialogue, international cooperation, and strengthening global trade.

In an international backdrop of growing protectionism and unilateralism, this agreement represents a signal in favor of international trade as a factor for economic growth, generating benefits to both blocs”

Luiz Inácio Lula da Silva, President of the Republic of Brazil

“In an international backdrop of growing protectionism and unilateralism, this agreement represents a signal in favor of international trade as a factor for economic growth, generating benefits to both blocs. Its text widens the alternatives for Brazilian exports and for productive investments by the EU, and simplifies commercial rules for both sides. It represents a victory of dialogue, of negotiation, and of a bet on cooperation and integration among the countries and the blocs,” Lula stated on his X profile.

Approved by a qualified majority of the European States, the agreement now advances to the final stages of internalization and ratification, following each part’s institutional procedures. After this Friday’s decision, the next step will be the formal signing of instruments. The signing ceremony is expected to be scheduled jointly between MERCOSUR and the EU countries, location and date yet to be determined.

In Brazil, the text will be submitted to the appreciation of the National Congress. The congresses of the remaining South American countries must also approve it. In the European context, the law foresees that, in the case of commercial agreements, approval by the European Parliament is sufficient.

This Friday’s approval represents a decisive step in the consolidation of one of the world’s largest commercial agreements, the negotiations of which began in  1999, and coronates a process marked by the direct political engagement of the Brazilian Government over the past years. Under President Lula’s leadership, Brazil played a central role in resuming the dialogue between the blocs, resolving bottlenecks, and building a balanced and modern understanding compatible with the economic, social, and environmental challenges of the 21st century.

The negotiations of the MERCOSUR-European Union Partnership Agreement were definitely concluded on December 6, 2024, after successive technical and political rounds. The agreement was later celebrated by the leaders of the two blocs, consolidating the integration between the planet’s two largest economic regions. Together, MERCOSUR and the European Union gather 718 million people and a combined Gross Domestic Product of approximately USD 22.4 trillion, configuring the largest agreement ever signed by MERCOSUR and one of the most relevant celebrated by the European Union.

STRATEGIC PRIORITY – Since the beginning of his third term, President Lula prioritized the strengthening of Brazil’s international insertion through the valorization of MERCOSUR and of the bloc’s wide network of trade agreements. President Lula’s direct action was crucial to building political trust among the European countries, making it possible to renegotiate sensitive issues from the 2019 text, and ensuring more balanced commitments in the fields of trade, sustainability, industrial development, and political cooperation.

The MERCOSUR-European Union Partnership Agreement significantly expands access of South American products to the European market through the elimination of tariffs on approximately 95 percent of the goods imported by the European Union over different timeframes. Moreover, the text maintains key public policy instruments, ensuring space for actions in fields such as health, employment, innovation, environmental protection, family farming, and strengthening of small and medium-scale companies.

In a joint press release, the Brazilian Ministries of Foreign Affairs and of Development, Industry, Trade, and Services stated that Brazil salutes the decision by the Council of Europe.

“The approval by the European community’s institutions will allow the Partnership Agreement to be signed after over 26 years since the beginning of negotiations. This agreement will integrate two of the world’s largest economic blocs, gathering approximately 720 million people and a Gross Domestic Product (GDP) of more than USD 22 trillion. This is the largest commercial agreement ever signed by MERCOSUR and one of the largest among those adopted by the European Union with commercial partners,” reads the press release.

MERCOSUR – European Union Agreement

After more than two decades of negotiations, a historical understanding has advanced to create one of the world’s largest free trade areas

Aggregated population
718 million people

Combined GDP
USD 22.4 trillion

WHAT CHANGES

Gradual reduction of tariffs will lower the cost of inputs, machinery, and medication imported from the European Union, increasing the industry’s competitiveness and contributing to lowering prices in the internal market.

↓ 0.56 percent

Estimated average drop in consumer prices
(throughout two decades)

ECONOMIC BOOST

Estimated long-term effects:

GDP:
+0.34 percent

(BRL 37 billion)

Exports:
+2.65 percent

(BRL 52 billion)

EMPLOYMENT AND INCOME

The agreement brings the expectation of:

• increase in real wages,
• expansion of investments in the country,
• generation of new working posts.

Source: Brazil’s Ministry of Development, Industry, Trade and Services, and Ministry of Foreign Affairs

MULTIPLE DIMENSIONS – For Brazil, the strategic value of this agreement contemplates multiple dimensions. The European Union is the country’s second-largest commercial partner, with a trade chain of approximately USD 95.5 billion in 2024. The understanding tends to stimulate investments, favor the modernization of the Brazilian industrial park, increase the competitiveness of the national economy, and strengthen Brazil’s integration to global chain values. Moreover, it strengthens the European Union’s position as the main source of direct foreign investment in the country.

In addition to the commercial pillar, the agreement establishes permanent mechanisms for political cooperation and institutional dialogue, reaffirming shared commitments to democracy, human rights, and multilateralism. In an international backdrop marked by the advancement of protectionism and growing geopolitical tensions, the understanding signals the two blocs’ disposition to strengthen international rules based on predictability, dialogue, and cooperation.

SUSTAINABILITY – The text also incorporates innovative commitments to trade and sustainable development, reconciling the expansion of economic exchange with environmental preservation and the promotion of high social standards. It includes unprecedented rebalancing mechanisms for concessions, which offer greater legal certainty to MERCOSUR exporters in the face of potential internal measures by the European Union that could compromise the negotiated benefits.