Brazilian President Lula da Silva’s recent announcement that the Mercosur–European Union (EU) trade agreement will be signed on December 20 is a diplomatic milestone. What is pitched as the largest trade deal in history (in South America, largely pushed by Brazil) would bind two economic blocs representing nearly 718 million people and a combined GDP close to US$ 22 trillion. Brussels’ leadership under Ursula von der Leyen is calling the pact the biggest ever negotiated by the EU.

In a world of shifting alliances, economic pressure and supply-chain uncertainty (in the age of Trump), Brasília sends a blunt message: South America is seeking a diversified platform of partners.

The numbers behind this ambition are impressive enough. In 2024, the EU imported €56.0 billion in goods from the South American bloc (Mercosur) and exported €55.2 billion in return — a total trade flow surpassing €111 billion. Over the past decade, EU imports from Mercosur have increased by more than 50%, while exports rose by roughly 25% — reflecting growing interdependence, albeit under asymmetric terms. Brazil remains overwhelmingly dominant in that trade, accounting for over 80% of all EU–Mercosur exchanges.

For Brazil, the potential upside is clear. According to government estimates, full implementation of the agreement could raise bilateral trade by around R$ 94.2 billion (or US$ 17,64 billion) — roughly a 5.1% increase over current levels — and yield a long-term gain of about R$ 37 billion to GDP (US$ 6.93 billion).

More concretely, Rio de Janeiro’s export-promotion agency anticipates a short-term boost of US$ 7 billion in Brazilian exports to........

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