World Business Report Europe and South America to sign free trade deal
Jan 16, 2026
Natalie Tocci, a foreign policy expert and professor at Johns Hopkins SAIS, dives into the groundbreaking EU–Mercosur trade agreement, 25 years in the making. She highlights how this deal will cut import taxes on over 90% of goods, benefiting European exporters while providing new markets for South American farmers. Tocci also discusses the geopolitical implications, including Europe's desire to diversify trade away from US influence, and the political challenges ahead in the European Parliament for ratification.
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Farmers Describe Feeling Betrayed
- French farmer Jean-Matteo Tevano described feeling betrayed by the EU over cheap Mercosur imports.
- He warned differing production conditions make fair competition almost impossible for European farmers.
Trade Deal Reshapes Europe–South America Relations
- The EU–Mercosur deal removes tariffs on over 90% of goods, reshaping trade flows between Europe and South America.
- Natalie Tocci argues geopolitical shifts, notably US policy under Trump, pushed Europe to diversify partners and seal the agreement.
Trade Deals Require Political Trade‑Offs
- Trade deals create clear winners and losers, forcing political trade-offs and compensation mechanisms.
- Natalie Tocci stresses safeguards and compensation are needed to avoid losing sight of broader strategic gains.