SÃO PAULO — The European Union on Friday reached a trade agreement with Brazil, Argentina and two other Latin American nations, with the goal of forging closer commercial ties among regions that are home to 780 million people with combined trade and services worth more than $1 trillion.
Officials on both sides of the Atlantic hailed the agreement, struck after two decades of negotiations, as a powerful endorsement of multilateral trade at a time when global protectionism is on the rise.
The agreement is the largest ever concluded by the European bloc and it represents an important victory for the presidents of Brazil and Argentina, who have been championing free trade in a region with notoriously closed economies. Their alliance, known as Mercosur, also includes Uruguay and Paraguay.
“I measure my words carefully when I say that this is a historical moment,” Jean-Claude Juncker, the president of the European Commission, said at the end of negotiations in Brussels. “In the midst of international trade tensions, we are sending today a strong signal with our Mercosur partners that we stand for rules-based trade.”
Under the agreement, tariffs worth billions of dollars will be eliminated in the two regions, which together represent a quarter of global gross domestic product, benefiting a vast array of products, including Brazilian orange juice, Argentine steak, German cars and Italian wines.
“Historic!” wrote Brazil’s president, Jair Bolsonaro, on Twitter. He had vowed to jumpstart the country’s stagnant economy by opening it up to less restrictive trade. “This will be one of the most important trade agreements of all time and will bring enormous benefits to our economy.”
President Mauricio Macri of Argentina, who is in need of some good news as he prepares to run for re-election amid a struggling economy, also celebrated the deal from the Group of 20 summit in Osaka, Japan: “HISTORIC AGREEMENT,” he wrote on Twitter.
Argentina’s Secretary of Foreign Relations, Horacio Reyser, called the accord “a milestone that marks a before and after with the potential to transform the national productive matrix.”
Negotiations between the two blocs had been lumbering along since 1999, but picked up speed after President Trump was elected in 2016, vowing to protect American workers and goods.
Continuing trade talks between the United States and the European Union broke down as Mr. Trump imposed stiff tariffs on steel and aluminum from European nations, prompting Europe to retaliate with levies on American orange juice, motorcycles and tobacco.
That coincided with a political shift in the key Mercosur countries. Mr. Macri had already been pushing for more free trade when Brazil’s then president, Dilma Rousseff, a progressive, was impeached in 2016, paving the way for more market-friendly economic policies under conservative leaders.
The new agreement provides a counterpoint to the trade war between the United States and China, and Mr. Trump’s trade tensions with Mexico.
“Today’s agreement brings Europe and South America closer together in a spirit of cooperation and openness,” said Cecilia Malmstrom, the European Union’s commissioner for trade. “Once this deal is in place, it will create a market of 780 million people, providing enormous opportunities for E.U. businesses and workers in countries with whom we have strong historical links and whose markets have been relatively closed up to now.”
The pact includes agreements on how to deal with agricultural sanitary issues and how to provide protection for products marketed based on their geographical origin, like Prosciutto di Parma.
It was reached despite a last-minute hiccup between Mr. Bolsonaro and President Emmanuel Macron of France at the G20. Mr. Macron warned that he would not sign a trade deal if Brazil pulled out of the Paris climate agreement. After threatening to cancel a bilateral meeting on Friday with Mr. Macron, Mr. Bolsonaro sat down with the French leader and invited him to visit the Amazon.
The European bloc has also recently reached trade agreements with Canada, Mexico and Japan. This is the first major trade agreement for Mercosur since it was created in the 1990s.
The two regions will now need to finalize the legal text of the agreement. It will then go to the European Parliament for ratification, a step that is not expected to be controversial.