This agreement aims to establish one of the world's largest free trade zones, potentially benefiting over 700 million people.

The German automotive industry is expected to benefit significantly from the agreement, with Chancellor Olaf Scholz advocating for its completion after years of negotiations.

If negotiations conclude successfully, formal signing of the agreement is anticipated in the latter half of 2025, following necessary legal reviews and translations.

There is also growing interest in Mercosur as a source of critical minerals, such as lithium, which are essential for the EU's green transition.

Supporters, including the German government, argue that the deal is crucial for diversifying trade, especially in light of reduced access to Russian markets and concerns over reliance on China.

The European Union and the Mercosur group of Latin American countries have finalized terms for a significant free trade deal, announced by European Commission President Ursula von der Leyen during her visit to Montevideo, Uruguay.

Despite a preliminary agreement reached in 2019, there are concerns that the new deal may face similar ratification challenges, as it requires approval from at least 15 EU countries representing 65% of the population.

Current tariffs on imports from the EU can reach as high as 35% on cars and 18% on chemicals, but the new agreement seeks to gradually eliminate these tariffs, potentially saving billions of euros annually.

The EU views this trade deal as a strategic move against the backdrop of competition with China and as a message to the incoming U.S. President Donald Trump about the benefits of free trade.

The upcoming summit will also feature Argentina's new President Javier Milei, who has indicated a willingness to withdraw from Mercosur unless allowed to pursue separate bilateral trade agreements.

Negotiations for this deal have been ongoing for over two decades, previously stalled due to EU concerns over environmental commitments and competition in agriculture.

Opposition to the agreement is growing, particularly among farmers in France, Belgium, Austria, and Poland, who fear it could undermine EU agricultural standards and lead to increased deforestation in South America.