PARIS (AP) — After more than 20 years of negotiations, the 27-nation European Union and Mercosur — a South American trade bloc of Brazil, Argentina, Paraguay, Uruguay and Bolivia — are still trying to finalize a major trade agreement that is sparking protests by European farmers.

A draft deal was announced in 2019, but disagreements over environmental, economic and political issues are delaying its final approval.

Here’s a look at the deal, why it matters, and challenges it faces:

What is the deal about?

It aims to create one of the largest free trade zones in the world, covering over 700 million people and nearly 25% of global GDP. Much like the U.S.-Mexico-Canada free trade agreement, its goal is to reduce tariffs and trade barriers, making it easier for businesses on both sides to export goods.

For the EU, the deal would mean lower tariffs on products like cars, machinery and chemicals. Mercosur countries would benefit from better access to EU markets for agricultural exports such as beef, poultry and sugar.

Negotiations began in 1999 and an initial agreement was reached in 2019, but it remains unratified due to significant opposition, particularly from France.

Why are some farmers opposing the deal?

European farmers, especially in France, worry that an influx of South American products would saturate their markets, undercutting local agriculture.

One year after a massive European farmers’ protest movement, another round of protests have erupted across the continent, with many claiming that reduced tariffs or duty-free quotas for South American products could be fatal for them.

For example, 99,000 tons of beef would face a reduced tariff of just 7.5%, while 180,000 tons of poultry would enter duty-free. According to the European Commission, this accounts for less than 2% of the EU’s annual beef consumption.

Livestock farmers argue they cannot compete with South American producers, who benefit from lower labor costs, larger farms and less stringent regulations on practices such as the use of growth hormones compared to EU standards.

In October, a European Commission audit found that Brazil, the world’s largest exporter of beef, cannot guarantee that its exports to the EU are free of the growth hormone “oestradiol 17-β,” which has been banned in Europe for decades.

Who supports it?

Germany, Spain, Italy and Portugal are among EU countries pushing for the deal to be finalized by year's end. Germany, in particular, sees Mercosur as a key market for its automakers.

In South America, leaders like Brazilian President Luiz Inácio Lula da Silva view the agreement as a boost for regional trade and economic growth. Countries like Uruguay and Paraguay also support the deal, hoping to diversify their trade partners and reduce reliance on China. Argentina’s President Javier Milei has also backed it, signaling a shift from his predecessor’s skepticism.