Italy Hails Economic Benefits Following Formal Signing of EU-Mercosur Trade Deal

Landmark EU-Mercosur Trade Agreement Formally Signed

The long-negotiated trade agreement between the European Union and the Mercosur bloc was formally signed on January 17, 2026, in Asunción, Paraguay. This significant development follows the EU Council's authorization for the agreement's signature on January 9, 2026, marking a crucial step after over two decades of negotiations. The deal aims to create one of the world's largest free trade zones, encompassing a combined population of approximately 700 million people and systematically dismantling tariffs on a vast majority of goods traded between the two blocs.

Italy's Pivotal Role and Anticipated Economic Gains

Italy played a pivotal role in securing the agreement's progression, providing crucial support on January 9, 2026, after earlier hesitations. This backing was instrumental in achieving the qualified majority needed for the deal to advance. Italian Prime Minister Giorgia Meloni and Foreign Minister Antonio Tajani were key figures in advocating for the agreement, with Tajani hailing it as 'good news for Italy'. Italy's support was reportedly secured through concessions, including commitments for additional agricultural funding in the next EU budget, commencing in 2028, and exemptions from carbon taxation on fertilizer products.

Analysts in Rome have underscored the substantial economic and trade benefits Italy expects to reap from the newly signed deal. Experts predict strong economic and export growth, particularly for small and medium-sized enterprises (SMEs) and the nation's renowned high-quality agri-food sector. The agreement is projected to reduce access costs and significantly enhance the competitiveness of Italian exports. Foreign Minister Tajani has expressed an ambitious goal of reaching 700 billion euros in exports, bolstered by this agreement.

Specific Italian sectors are poised for considerable advantages. The deal is expected to eliminate tariffs, which could be as high as 35 percent, on products such as industrial machinery, chemicals, pharmaceuticals, fashion, textiles, wine, and spirits. Furthermore, the agreement includes provisions for the legal protection of 58 Italian Geographical Indications (GIs). This safeguard will apply to iconic products like Balsamic Vinegar of Modena, Gorgonzola, Parmigiano Reggiano, Pecorino Romano, S. Marzano tomatoes, Prosciutto di Parma, San Daniele, Grappa, and over 30 types of wine, including Barolo, Chianti, Lambrusco, and Prosecco, protecting them from imitation abroad.

Strategic Implications and Ratification Process

Beyond direct economic gains, the EU-Mercosur deal is viewed by Italian officials as a strategic move to counteract protectionist policies, particularly in light of actions by the United States. The agreement is also seen as a means to diversify trade relationships and reduce dependence on certain supply chains.

Despite the formal signing, the agreement is not yet fully in force. It still requires ratification by the European Parliament and the national parliaments of all 27 EU member states, as well as the legislatures of the Mercosur parties. This comprehensive ratification process is anticipated to extend into 2027. An Interim Trade Agreement (ITA), however, could take effect sooner, allowing for immediate tariff reductions and market access benefits.