EU-Mercosur trade deal unlocks new markets for Estonia’s exporters
The European Union and Mercosur have signed a landmark free trade agreement, creating the world’s largest trade bloc. The deal, finalised on Saturday in Asunción, Paraguay, covers over 720 million people and will eliminate tariffs on nearly 90% of industrial goods. Estonia has welcomed the agreement, seeing it as a major opportunity for its exporters and a step toward deeper economic ties with South America.
The signing ceremony took place on January 17, 2026, with EU Trade Commissioner Maroš Šefčovič and Paraguayan President Santiago Peña putting pen to paper. European Commission President Ursula von der Leyen and Portuguese Prime Minister António Costa also attended the event. The agreement will first apply as an interim trade deal before expanding into a full partnership covering trade, political cooperation, and sustainable development.
Mercosur, which includes Argentina, Brazil, Paraguay, and Uruguay, represents a market of 270 million people and the world’s sixth-largest economy. The deal will remove most tariffs on Estonian industrial exports, particularly benefiting machinery, electrical equipment, and medical devices. Estonian service exports to the bloc—currently worth around €58.5 million—are dominated by telecommunications, transport, and tourism.
The agreement also opens new opportunities for Estonian agricultural producers while keeping EU safeguard measures in place. Estonia has assessed the deal as compliant with EU law and believes it provides strong protections. Additionally, the country plans to open an embassy in Brazil, reinforcing economic diplomacy and helping businesses enter the South American market.
The EU-Mercosur deal will gradually phase out tariffs, boosting trade for Estonian companies in key sectors. The interim agreement will take effect first, followed by a broader partnership covering trade and political ties. For Estonia, the pact strengthens economic links with South America and supports plans for a new embassy in Brazil.
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