The signing took place in Asuncion, Paraguay, with European Commission President Ursula von der Leyen and Paraguay's President Santiago Pena present. The agreement represents the EU's largest trade accord to date, occurring amidst global concerns about tariff disputes and uncertainties surrounding international cooperation.

The Mercosur bloc comprises Argentina, Brazil, Paraguay, and Uruguay. This agreement aims to foster economic growth and strengthen political ties between the two regions, encompassing a combined population of over 700 million people and representing a significant portion of global GDP. Proponents say the deal will eliminate tariffs on a wide range of goods, from automobiles to agricultural products, fostering increased trade and investment flows.

However, the agreement has faced opposition, particularly from European farmers who fear increased competition from South American agricultural imports. Thousands of Irish farmers, for example, have protested the deal, expressing concerns about its potential impact on their livelihoods. Environmental groups have also voiced concerns about the potential for increased deforestation in the Amazon rainforest as a result of increased agricultural production in Mercosur countries.

The agreement must now gain the consent of the European Parliament and be ratified by the legislatures of Mercosur member states. The ratification process could take several years, and its success is not guaranteed given the political sensitivities surrounding trade and agriculture in both regions. The EU states have already signaled their approval of the Mercosur trade deal, ending the 25-year wait.