The planned association agreement between the EU and the Mercosur states (Brazil, Argentina, Paraguay, Uruguay) aims to create one of the largest free trade areas in the world. For Brazil, the largest economy in Latin America, this agreement offers not only short-term trade effects, but also long-term strategic opportunities to modernize and diversify its economy.
The most obvious advantage for Brazil is the reduction of tariffs and non-tariff trade barriers. The EU is one of Brazil's most important trading partners.
Tariff exemption: The agreement provides for the elimination of tariffs on over 90% of traded goods over a period of 10 to 15 years.
Competitive advantages in the agricultural sector: Brazil is an agricultural giant. The agreement would significantly improve access to the lucrative European market for key Brazilian products:
Immediate duty-free access: for products such as orange juice, instant coffee and fruit.
Improved quotas: Significant duty-free or duty-reduced quotas will be established for sensitive products such as beef, poultry, sugar and ethanol.
Elimination of export costs: The elimination of customs duties will make Brazilian products in Europe more competitive in terms of price compared to competitors from other regions.
Re-industrialization and access to technology
An often overlooked but decisive advantage for Brazil is the cheaper import of goods that are necessary for its own industrial base.
Cheaper primary products: Brazil imports machinery, chemicals, pharmaceutical products and vehicles partly from the EU. The elimination of customs duties on these imports reduces production costs for Brazilian industry.
Technology transfer: Easier access to European high-tech and mechanical engineering can increase the productivity of the Brazilian economy and drive forward modernization (re-industrialization).
Integration into global value chains: Harmonized standards will make it easier for Brazilian companies to feed parts and services into global supply chains.
Increase in foreign direct investment (FDI)
The agreement goes far beyond pure trade in goods and includes services, public procurement and investment protection.
Legal certainty: The agreement creates a stable legal framework. This reduces the risk for European investors and makes Brazil more attractive for long-term capital.
Infrastructure and services: European companies could invest more in Brazilian infrastructure projects (energy, transport, telecommunications), accelerating the country's modernization.
Services sector: Access to the Brazilian services market (e.g. maritime services, finance) is being opened up, which can increase efficiency in Brazil through competition.
For Brazil, the Mercosur-EU agreement represents a historic lever to free the economy from the "commodity trap". While the agricultural sector would see the most immediate gains, the long-term benefits lie in the reduction of production costs for industry, the inflow of investment capital and geopolitical risk diversification.
It offers the opportunity to make the Brazilian economy more competitive, more productive and more integrated into the Western economic area.
