The European Union and Mercosur on Saturday formally signed one of the world’s largest free trade agreements, concluding negotiations that have stretched over more than 20 years.

European Commission President Ursula von der Leyen and European Council President Antonio Costa signed the accord in Asunción, Paraguay, a week after the EU gave its final approval to the deal with the South American bloc comprising Brazil, Argentina, Uruguay and Paraguay.

The agreement will create an integrated market of about 780 million consumers, bolstering Europe’s presence in a resource-rich region increasingly contested by the United States and China.

Von der Leyen and leaders including Brazil’s Luiz Inacio Lula da Silva have also promoted the pact as a signal of strategic independence from the two superpowers.

“This moment is about connecting continents,” von der Leyen said at the signing. “It reflects a clear and deliberate choice: We choose fair trade over tariffs; we choose a productive long-term partnership over isolation; and, above all, we intend to deliver real and tangible benefits to our people and our businesses.”

The phased elimination of tariffs on agricultural products is expected to benefit South America’s farming powerhouses, while scrapping duties on cars, machinery and other goods will favour European industry.

The agreement is estimated could lift the Mercosur bloc’s economy by up to 0.7 per cent by 2040, and Europe’s by about 0.1 per cent after 15 years.

“We are talking about the largest agreement between two blocs — it puts together economies that account for $22 trillion,” Tatiana Prazeres, Brazil’s foreign trade secretary, said in public remarks earlier this week. “That will help the region to be better integrated to the global economy.”

Argentina’s President Javier Milei, Uruguay’s Yamandu Orsi and Paraguay’s Santiago Peña attended the signing ceremony.

Brazil’s President Luiz Inacio Lula da Silva, who has been involved in the trade negotiations since his first term began in 2003, did not travel to Paraguay but met with von der Leyen in Rio de Janeiro on Friday.

The agreement nearly collapsed in December amid opposition from major farming nations such as France and Italy.

However, safeguard measures designed to protect European farmers helped win over Italian Prime Minister Giorgia Meloni, leaving French President Emmanuel Macron without enough support to block the deal.

Following Saturday’s signing, the pact still requires approval by the European Parliament.