Mercosur-EU Trade Agreement Promises Economic Boost for Brazil and Expands Global Market Access
A new Mercosur-EU trade deal ends decades of negotiation, promising significant economic gains for Brazil and wider market access while facing political hurdles.
- • Mercosur and the EU signed a free trade agreement covering 720 million people with a combined GDP of $22 trillion.
- • Mercosur will eliminate tariffs on 91% of EU exports over 15 years; the EU will remove tariffs on 92% of Mercosur exports over ten years.
- • Brazil's GDP could increase by 0.46% (about $9.3 billion) by 2040, with investment growth and expanded trade flows expected.
- • The agreement still requires parliamentary ratification and faces opposition from European agricultural producers.
- • Brazil’s access to global trade markets is expected to rise significantly from 8% to 36%.
Key details
After more than 25 years of intense negotiations, Mercosur and the European Union have signed a landmark free trade agreement, establishing one of the world’s largest free trade zones that spans 720 million people and a combined GDP of $22 trillion. The official signing occurred in Asunción, Paraguay, in a ceremony attended by Mercosur presidents except Brazil’s Lula da Silva, who met separately in Rio de Janeiro with Ursula von der Leyen, President of the European Commission.
The treaty includes significant tariff reductions: Mercosur will eliminate tariffs on 91% of EU exports over 15 years, while the EU will progressively remove tariffs on 92% of Mercosur exports within ten years. Brazilian agricultural exports, in particular, stand to gain better access to European markets, while Brazilian consumers may benefit from lower prices on imported goods such as wines, olive oils, and cheeses.
Economic projections suggest Brazil will be the principal beneficiary among Mercosur countries, with its GDP expected to grow by 0.46%—approximately $9.3 billion—by 2040. Mercosur’s overall GDP is forecasted to increase by 0.2%, while the EU sees a modest 0.06% rise. Additionally, investments in Brazil are anticipated to grow by 1.5% over the next 15 years, with exports and imports increasing by 3%, signaling expanded trade flows.
Brazil’s access to the global market is expected to jump significantly from 8% to 36%, highlighting the deal’s potential to widen Brazil’s economic footprint. However, the accord still requires parliamentary ratification in the involved countries, where political resistance may arise, notably from European agricultural sectors concerned about competition and differences in production standards. Previous negotiations had stalled due to these concerns until the European Parliament approved protections for their farmers.
Experts note the agreement may have only a modest immediate economic impact but regard it as a geopolitical success for the EU, positioning it as a stronger trade partner in South America and promoting multilateral trade cooperation.
This article was synthesized and translated from native language sources to provide English-speaking readers with local perspectives.
