Economy
EU-Mercosur deal could create one of world’s biggest free trade zones
Talks on a landmark free trade deal between the European Union and four South American countries (Mercosur bloc) began so long ago that even the euro wasn’t in circulation, China hadn’t yet joined the World Trade Organization (WTO) and Venezuela was still America’s top oil provider.
But against a starkly different geopolitical background and tough odds – including backlash from powerful protectionist lobbies – the EU and the South American alliance known as Mercosur are expected to formally sign their quarter-century-in-the-making trade pact this Saturday at a ceremony in Paraguay.
This is the first major trade agreement for Mercosur, which includes the region’s two biggest economies, Brazil and Argentina, along with Paraguay and Uruguay. Bolivia, the newest member, was not involved in negotiations but can join the agreement in the coming years.
The trans-Atlantic trade deal – lifting tariffs on products ranging from Argentine steaks and Brazilian copper to German cars and Italian wine – still has to be ratified by the European Parliament.
The significance of creating one of the world’s largest free-trade zones – home to more than 700 million people and accounting for a quarter of global gross domestic product (GDP) – while President Donald Trump yanks the U.S. out of the international economy is not lost on the signatories.
European Commission President Ursula von der Leyen hailed the deal last week as a powerful endorsement of multilateralism “in the face of an increasingly hostile and transactional world.” Brazilian President Luiz Inacio Lula da Silva, 80, called it a rare “victory for dialogue, negotiation and the bet on cooperation.”
That victory comes at the expense of the U.S. and China, experts say, as Trump aggressively asserts American authority in the resource-rich region and Beijing uses its massive trade and loans to build influence.
South America ‘can continue to flex its muscles’
“It’s a signal that South American economies are seeking to hedge away from this great power competition between the U.S. and China,” said Lee Schlenker, a research associate with the Global South program at the Quincy Institute for Responsible Statecraft, a Washington think tank.
“It shows that South America can continue to flex its muscles in the international sphere, to diversify its trade partners and exert a certain level of autonomy it’s often denied.”
The accord grants South American nations, renowned for their fertile land and skilled farmers, increased access at a preferential tax rate to Europe’s vast market for agricultural goods.
In Argentina, exporters reckon they’ll save tens of millions of dollars a year thanks to the deal’s immediate elimination of a 20% tariff on the EU’s long-standing quota scheme for high-quality meat imports.
It’s a breakthrough for Argentina, a nation dominated for decades by left-leaning populist governments that kept the economy closed to the outside world and prioritized the domestic market to the extent of imposing taxes on farm exports to keep food prices down.
“We’re in the midst of a paradigm shift here,” said Carlos Colombo, the president of Canuelas Cattle Market in Buenos Aires province, where over 12,000 cattle are sold daily, many destined for Europe and China. “Argentina has reopened itself to the world.”
Argentine President Javier Milei may be Trump’s strongest ideological ally in Latin America – sharing his disdain for the U.N. and the Paris climate accord – but no one can call the radical libertarian a protectionist.
At first, he derided the notoriously slow-moving Mercosur as irrelevant and threatened to ditch it. But he changed his tune since realizing the bloc’s potential to sweep away tariffs and slash customs red tape.
“He sees this agreement as a way to revitalize and re-signify Mercosur,” said Marcelo Elizondo, an Argentine economic analyst specializing in international trade.
The free-trade fever has also infected Brazil’s long-closed economy. Apex, a Brazilian government investment agency, estimates that EU-bound agricultural exports like instant coffee, poultry and orange juice will rake in $7 billion in the coming years.
Farmers disagree
However, squeezed by environmental regulations and fearing a flood of cheap food products from across the Atlantic, farmers have blocked highways and descended on the streets of European capitals in an explosion of outrage against the agreement.
The EU has scrambled to soothe the concerns over decades of negotiations, adding environmental and animal welfare safeguards to the accord and imposing strict quotas for South American exports of meat and sugar to ensure homegrown produce stays competitive.
Even so, the angry farmers ultimately persuaded France, Poland and a few other states to oppose the deal in last week’s internal EU vote, depriving the accord’s supporters of what they hoped would be a show of unity. Italy and other agricultural powerhouses only came around after the EU offered farmers generous subsidies to the tune of $52 billion.
“It’s a sizable bribe,” said Jacob Funk Kirkegaard, nonresident senior fellow at the Peterson Institute for International Economics. “EU leaders decided that the deal is so important at this moment, it’s worth it.”
Some have dubbed the deal “cows for cars,” reflecting the perception that Europe’s auto industry will also win big.
Clobbered by growing competition with China and sky-high U.S. tariffs, vaunted German auto giants like Volkswagen and BMW are glad for the boost, as are producers in Europe’s pharmaceutical, construction and machinery sectors gaining access to hundreds of millions more consumers.
Experts say that the elimination of 35% tariffs on auto parts and cars gives European industrial exporters a rare chance to claw back their South American market share from cheaper Chinese rivals.
“Failing to sign the EU-Mercosur free trade agreement risked pushing Latin American economies closer to Beijing’s orbit,” said Agathe Demarais, a senior policy fellow with the European Council on Foreign Relations.
But many are still are holding their breath, having watched negotiations lumber along for years only to trip up at the last minute.
“There are still several steps that have to be taken … and Europe continues to be very careful,” Colombo said, straining to be heard over the hollers of cowboys prodding hundreds of bellowing cattle into trucks.
“Let’s not forget, this is historic. We’ve never reached an agreement like this before.”
Netflix has withdrawn its bid to acquire Warner Bros. Discovery’s studio and streaming assets, in a surprising decision that effectively clears the way for Paramount to pursue a takeover of its storied Hollywood rival.
On Thursday, Warner’s board announced that Skydance-owned Paramount’s latest offer to buy the entire company for $31 per share was superior to the agreement it had previously struck with Netflix.
Warner gave Netflix four business days to come up with a counteroffer – but Netflix instead responded less than two hours later, declining to raise its proposal. It said the new price it would have to pay made the deal “no longer financially attractive.”
“We believe we would have been strong stewards of Warner Bros.′ iconic brands,” Netflix’s co-CEOs Ted Sarandos and Greg Peters said in a joint statement. “But this transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.”
Netflix shares jumped more than 10% after it declined to raise its offer.
The Warner Bros. board still has to terminate the Netflix deal and adopt Paramount Skydance’s offer.
“Once our board votes to adopt the Paramount merger agreement, it will create tremendous value for our shareholders,” Warner CEO David Zaslav said in a statement. “We are excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery and can’t wait to get started working together telling the stories that move the world.”
A Paramount buyout of Warner Bros. Discovery would reshape Hollywood and the wider media landscape. And unlike Netflix – which was only eyeing Warner’s studio and streaming business – Paramount wants the entire company. That means HBO Max, cult-favorite titles like “Harry Potter” and even CNN could soon find themselves under the same roof as Paramount’s CBS, “Top Gun” and the Paramount streaming service.
The prospect of such a combination, which will still need the green light from both Warner shareholders and regulators, poses both antitrust concerns and questions of political influence.
Messy battle
Netflix’s decision to walk away on Thursday marks the latest development in a monthslong, messy corporate battle over Warner’s future. Sarandos and Peters thanked Warner’s leadership despite the final outcome.
Warner had repeatedly backed the deal it struck with Netflix since December right up until Thursday evening, when its board continued to recommend Netflix even while calling Paramount’s bid valued at about $111 billion, including debt, “superior.” Netflix had previously put a $27.75 per share offer on the table for Warner’s studio and streaming business, totaling nearly $83 billion including debt.
In a statement Thursday night, Warner’s Zaslav said Netflix executives had been “extraordinary partners” and that he wished them “well in the future.”
After months of a heated back-and-forth amid Paramount’s hostile campaign to take over Warner without the board’s blessing, Warner also changed its tune about the remaining prospective buyer.
Warner’s board hasn’t officially adopted Paramount’s merger agreement yet, but once it does, Zaslav said it “will create tremendous value.” He added that the company was “excited about the potential of a combined Paramount Skydance and Warner Bros. Discovery.”
Paramount did not immediately respond to requests for further comment. But CEO David Ellison earlier applauded Warner’s board affirming “the superior value of our offer.”
2 of Hollywood’s legacy studios
A Paramount-Warner combo would combine two of Hollywood’s five legacy studios that remain today, in addition to their theatrical channels. Beyond “Harry Potter,” Warner movies like “Superman,” “Barbie,” and “One Battle After Another” – as well as hit TV series like “The White Lotus” and “Succession” – would join Paramount’s content library.
Paramount’s lineup of titles includes “Top Gun,” “Titanic” and “The Godfather.” And beyond CBS, it owns networks like MTV and Nickelodeon, as well as the Paramount streaming service.
A merger between the two companies would put CNN under the same roof as CBS, which has already seen significant editorial shifts under new Skydance ownership. Paramount took steps to appeal to more conservative viewers in its news operations, notably with the installation of Free Press founder Bari Weiss as editor-in-chief of CBS News. And if the company’s takeover bid of Warner is successful, critics warn similar shifts could happen CNN, a network that has long attracted ire from U.S. President Donald Trump.
“Any concerns about Netflix owning Warner Bros. are only heightened by the prospect of Paramount owning all of WBD. But it might not even matter,” Mike Proulx, vice president and research director at Forrester, a market research company, said in an email. “Politics are playing an outsized role in this deal, and they’ve been on Paramount’s side from the get‑go.”
Trump has a close relationship with the billionaire Oracle founder Larry Ellison, the father of Paramount’s CEO David Ellison who is heavily backing Paramount’s bid to buy Warner. And Paramount’s aggressive push to acquire Warner arrived just months after Skydance closed its own buyout of Paramount in a contentious merger approved just weeks after the company agreed to pay the president $16 million to settle a lawsuit over editing at Paramount’s “60 Minutes” program on CBS.
Still, Trump has continued to publicly lash out at Paramount over editorial decisions at CBS’ “60 Minutes.” And while the president previously made unprecedented suggestions about his involvement in seeing a Warner deal through, he’s since walked back those statements and maintained that regulatory approval will be up to the Justice Department.
Still, top Democratic lawmakers have sounded the alarm about the Republican president’s ties to companies like Paramount and potential consequences of growing corporate power.
“A handful of Trump-aligned billionaires are trying to seize control of what you watch and charge you whatever price they want,” Democratic Sen. Elizabeth Warren, a longtime antitrust hawk, said in a statement Thursday night. She also called a potential Paramount-Warner combo an “antitrust disaster.”
Critics
Executives at Paramount have argued that merging with Warner will allow it to compete with bigger rivals particularly in the streaming space, and bring larger content libraries for its customers. But Warren and other critics say such a merger threatens higher prices, and that a Warner takeover would only further consolidate power in an industry already run by just a few major players. Some trade groups also warn that could mean job losses and less diversity in filmmaking.
When Netflix was still in the running, one of its key arguments against a Warner-Paramount tie-up was that it would combine two very similar companies: two legacy studios, two theatrical channels and two major news networks. The streaming giant said that posed a higher risk for job losses and other competition concerns.
In contrast, executives from both Netflix and Warner argued at a Senate antitrust hearing earlier this month that Netflix doesn’t have the same studios and film distribution that Warner does. That was “one of the reasons that the Netflix offer appeals to us so much,” Bruce Campbell, Warner’s chief revenue and strategy officer, told senators on Feb. 3, noting that the company believed Netflix would not only keep Warner’s operations intact, but “invest in continued production.”
How regulators will respond to a Warner-Paramount deal remains to be seen. The U.S. Department of Justice has already initiated reviews, and other countries are expected to do so, too.
Warner shareholders will have to be convinced, too. Beyond a higher price, Paramount has also tried to entice them by pledging to move up a previously-promised “ticking fee.” The company initially said it would pay 25 cents per share for every quarter the deal drags on past the end of the year. Now it’s agreed to pay that amount if the deal doesn’t go through by the end of September. It also agreed to a regulatory termination fee of $7 billion.
But Paramount is taking on billions of dollars in debt to finance its offer – something critics have warned could only increase to the likelihood of potential job losses and other restructuring down the road. Foreign sovereign wealth funds have also provided equity for the offer, drawing added scrutiny.
Türkiye’s unemployment rate increased to 8.1% in January from 7.8% the previous month, the country’s statistical authority said Friday.
The Turkish Statistical Institute (TurkStat) reported that the number of unemployed people aged 15 and over rose by 73,000 to 2.82 million.
Unemployment stood at 6.6% among men and 11% among women in January.
Meanwhile, employment also declined, with 516,000 fewer people working, bringing the total number of employed to 32.95 million. The overall employment rate was 47.9%, including 65.3% for men and 30.9% for women.
The labor force decreased by 443,000 to 33.77 million, with the participation rate at 52.1%.
Youth unemployment – covering those aged 15 to 24 – edged up by 0.1 percentage points from December 2025 to 14.3% in January. It was 11.9% for men and 19% for women.
The United States has cautioned Syria against turning to Chinese technology for its telecommunications infrastructure, arguing such reliance would undermine U.S. interests and pose risks to national security, a report said on Thursday.
The message was conveyed during an unreported meeting between a U.S. State Department team and Syrian Communications Minister Abdulsalam Haykal in San Francisco on Tuesday, Reuters reported, citing three sources familiar with the matter.
Washington has been coordinating closely with Damascus since 2024, when Syria’s current President Ahmad al-Sharaa ousted longtime dictator Bashar Assad, who had a strategic partnership with China.
Syria is exploring the possibility of procuring Chinese technology to support its telecommunications towers and the infrastructure of local internet service providers, according to a Syrian businessman involved in the procurement talks.
“The U.S. side asked for clarity on the ministry’s plans regarding Chinese telecom equipment,” said another source briefed on the talks.
But Syrian officials said infrastructure development projects were time-critical and that Damascus was seeking greater vendor diversity, the source added.
U.S. export controls cited as barrier
Syria is open to partnering with U.S. firms but the matter was urgent and export controls and “over-compliance” remained an issue, according to person familiar with the meeting in San Francisco.
A U.S. diplomat familiar with the discussions told Reuters that the U.S. State Department “clearly urged Syrians to use American technology or technology from allied countries in the telecoms sector.”
It was unclear whether the United States pledged financial or logistical support to Syria to do so.
Responding to Reuters questions, a U.S. State Department spokesperson said: “We urge countries to prioritize national security and privacy over lower-priced equipment and services in all critical infrastructure procurement. If it seems too good to be true, it probably is.”
The spokesperson added that Chinese intelligence and security services “can legally compel Chinese citizens and companies to share sensitive data or grant unauthorized access to their customers’ systems” and promises by Chinese companies to protect customers’ privacy were “entirely inconsistent with China’s own laws and well-established practices.”
China has repeatedly rejected allegations of it using technology for spying purposes.
The Syrian Ministry of Telecommunications told Reuters any decisions related to equipment and infrastructure are made “in accordance with national technical and security standards, ensuring data protection and service continuity.”
The ministry said it is also prioritizing the diversification of partnerships and technology sources to serve the national interest.
Syria’s telecom infrastructure has relied heavily on Chinese technology due to U.S. sanctions imposed on Assad regime over the civil war that grew from a crackdown on anti-government protests in 2011.
Huawei technology accounts for more than 50% of the infrastructure of Syriatel and MTN, the country’s only telecom operators, according to a senior source at one of the companies and documents reviewed by Reuters. Huawei did not immediately respond to a request for comment.
Syria is seeking to develop its private telecommunications sector, devastated by 14 years of war, by attracting foreign investment.
In early February, Saudi Arabia’s largest telecom operator, STC, announced it would invest $800 million to “strengthen telecommunications infrastructure and connect Syria regionally and internationally through a fibre-optic network extending over 4,500 kilometers.”
The Ministry of Telecommunications says that U.S. restrictions “hinder the availability of many American technologies and services in the Syrian market.” It emphasized that it welcomes expanding cooperation with U.S. companies when these restrictions are lifted.
Syria has inadequate telecommunications infrastructure, with network coverage weak outside city centers and connection speeds in many areas barely exceeding a few kilobits per second.
Borge Brende, president and chief executive of the World Economic Forum (WEF), said he was resigning on Thursday amid controversy over his links to late sex offender Jeffrey Epstein, becoming the latest in several high-profile personalities to leave the post in the face of the Epstein files’ revelations.
Brende, a former Norwegian foreign minister who led the WEF for over eight years, is the latest figure to step down after his name was discovered in the millions of newly released documents related to the investigation into the late U.S. sex offender.
Being named in the files does not in itself imply wrongdoing or illegal behavior.
“After careful consideration, I have decided to step down as President and CEO of the World Economic Forum,” Brende said in a statement released by the WEF that does not explicitly mention Epstein.
“I am grateful for the incredible collaboration with my colleagues, partners, and constituents, and I believe now is the right moment for the Forum to continue its important work without distractions.”
WEF co-chairs Andre Hoffmann and Larry Fink thanked Brende for his “significant contributions” to the organization, which is best known for its annual high-profile gathering in the Swiss resort town of Davos.
Following massive public pressure, the Trump administration late last year began releasing millions of files from federal investigations into Epstein, who died in a New York prison in 2019 after being charged with sex trafficking of minors.
The Epstein files include scores of documents that have laid open the late billionaire’s wide-ranging contacts with the world’s elite, from politicians and royalty to scholars and actors.
Brende’s name also appears in the files, showing that he had been in touch with Epstein in 2018, years after he was first convicted of procuring a minor for prostitution in 2008.
Brende initially denied having had any contact with Epstein. He later admitted to having dined with the U.S. financier several times in 2018 and 2019.
According to Norwegian broadcaster TV2, Brende sent Epstein several text messages, which Brende said he had no recollection of. He also denied having been aware of Epstein’s criminal behaviour as well as his past.
An independent review launched by the WEF into the matter did not find any “additional concerns beyond what has been previously disclosed,” according to the statement.
Brende, in comments to Norwegian daily Dagens Næringsliv, acknowledged that his links to Epstein could distract from the WEF’s work.
However, the “external review” into the matter did not reveal anything that was “not already known and thoroughly covered in the media,” he said.
Brende served as Norwegian foreign minister from 2013 to 2017, when he became president and chief executive of the WEF. The organization’s annual conference in Davos brings together some of the most powerful figures from the worlds of politics and finance.
Other high-profile Norwegian figures that feature in the Epstein files include Crown Princess Mette-Marit and former prime minister Thorbjorn Jagland.
The European Bank for Reconstruction and Development (EBRD) has upgraded its growth outlook for Türkiye as the macroeconomic stabilization program balances growth and disinflation objectives, it said in a report published on Thursday, citing also a better-than-expected performance in 2025.
Real gross domestic product (GDP) growth is now projected to accelerate and stand at 4.0% in 2026 and 4.5% in 2027, the bank said in its report covering regional prospects. Earlier, in the report from September 2025, the bank predicted Türkiye’s growth to be at 3.5% this year.
“In Türkiye, growth picked up from 3.3% in 2024 to an estimated 3.7% in 2025, reflecting better-than-expected outturns across most sectors despite episodes of market volatility and a tight fiscal and monetary policy mix,” the EBRD said.
Strong private consumption and investment offset lower net exports on the demand side, while weak agricultural performance was compensated for by stronger activity in other areas of production.
Financial conditions stabilized and investor confidence recovered in the second half of 2025, the bank suggested, as evidenced by narrower credit default swap (CDS) spreads and improved access to international capital markets. Meanwhile, gross international reserves climbed above $200 billion for the first time, it added.
The EBRD, in its report, also pointed out that the seasonally adjusted unemployment rate fell from 8.6% at the end of 2024 to 7.7% at the end of 2025 and that headline annual inflation declined from its May 2024 peak of 75.5% to 30.9% in December 2025, supported by tight monetary conditions.
Meanwhile, average growth in the EBRD regions picked up to stand at an estimated 3.4% in 2025, with the bank expecting average growth to rise to 3.6% in 2026 and 3.7% in 2027.
The economies where the EBRD invests are continuing to navigate global trade tensions and geopolitical uncertainty, while resilient domestic demand and rapid adjustments in global supply chains are supporting economic activity.
The EBRD is one of Türkiye’s key investors, with more than 23 billion euros ($27.1 billion) committed across the country since 2009, largely in the private sector.
Tariffs impact
Meanwhile, the bank also said that the economic impact of U.S. President Donald Trump’s tariffs was “much lower” than expected last year, as it raised its growth forecast for 2026.
The U.S. Supreme Court last week struck down much of Trump’s tariff policy, prompting him to impose a new 10% duty under a different law, which he has vowed to raise to 15%.
But for countries where the European Bank for Reconstruction and Development operates, these developments will only bring “very limited” changes, chief economist Beata Javorcik told Agence France-Presse (AFP).
The EBRD was founded in 1991 to help former Soviet bloc nations embrace free-market economies, before extending its reach to the Middle East, North Africa and parts of sub-Saharan Africa.
“The impact of the U.S. tariffs for our countries of operation has been limited, much lower than anticipated,” Javorcik said.
“There are some countries that potentially could gain to see lower tariffs, like Serbia, Bosnia-Herzegovina, Moldova or Tunisia, but overall the picture is unchanged,” Javorcik said.
She cautioned that “we have not felt the full impact of tariffs yet,” as a large share of 2025 exports reached U.S. markets before the measures took effect.
The EBRD also said that the artificial intelligence boom has boosted U.S. imports of technology-related goods, including semiconductors.
This could benefit countries in Central Europe, the Baltics, Bulgaria and Romania that export these types of products, Javorcik said.
The International Monetary Fund (IMF) has unlocked close to $2.3 billion in funding for Egypt after its latest program reviews, it said on Wednesday, as the country pushes to liberalize its economy.
Egypt secured an expanded $8 billion package over nearly four years from the IMF in March 2024, contingent on a series of economic reforms.
In March last year, the global lender approved a new loan worth $1.3 billion for Egypt.
After completing the fifth and sixth reviews of the Extended Fund Facility, the IMF said on Wednesday that around $2 billion will be unlocked for Egypt.
At the same time, it will be able to draw an extra $273 million under the Resilience and Sustainability Facility (RSF) after the first review was completed, the IMF said in a statement.
“Egypt’s macroeconomic situation has improved amid sustained stabilization efforts,” the organization said.
“Tight monetary and fiscal policies together with exchange rate flexibility have helped restore macroeconomic stability, reduce inflation, and strengthen the external position.”
But it warned that structural reforms under the program have been “uneven” and efforts to reduce the state’s footprint “have been slower” than predicted.
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