European member states have authorized a trade deal with Mercosur, potentially creating the world’s largest free-trade area. The EU Council approved the EU-Mercosur Partnership Agreement and Interim Trade Agreement. The deal aims to reduce tariffs, open new markets, and save EU companies billions in export duties annually.

Luxury firms rely on the EU-Mercosur deal to offset tariffs imposed by the US. Talks for this deal began in 1999 and cover a market of over 700 million consumers. Italy’s fashion industry views the deal as crucial amid economic challenges and declining sales to China.

The EU is Mercosur’s second-largest trading partner, with trade in goods worth over 111 billion euros in 2024. The agreements aim to create new business opportunities while protecting sensitive sectors. However, Italy and other countries express concerns over potential cheap imports flooding the market.

Despite opposition from countries like France, the EU and Mercosur proceed with signing the agreements. The trade deal will enter into full force after ratification by all member states and Mercosur parties. The interim agreement will be in effect until the full partnership agreement takes over.

Read more at Yahoo Finance: The EU Council Greenlights Historic EU-Mercosur Trade Partnership