The EU-Mercosur Free Trade Agreement: what it means for your business
After 25 years of negotiations, the EU and Mercosur concluded their free trade agreement in December 2024. Once ratified, it will create one of the world’s largest free trade zones. Companies that act early will have a significant advantage.
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The largest trade deal the EU has ever negotiated, and a major opportunity for companies on both sides
On 6 December 2024, the European Union and Mercosur (Brazil, Argentina, Uruguay and Paraguay) concluded negotiations on a free trade agreement 25 years in the making, the largest trade deal the EU has ever concluded by volume of trade. The EU is Mercosur’s second-largest trading partner: EU exports to Mercosur reached €56 billion in goods in 2023, with EU investments in Mercosur amounting to €340 billion as of 2021.
The FTA still needs to be ratified by EU member states, the European Parliament and the legislatures of the four Mercosur countries. Ratification may take several years and faces political resistance in some countries, particularly France and Poland. However, the commercial planning opportunity begins now; companies that develop their market positions early will be best placed to benefit.
What changes for goods and services
Tariff reductions on key agricultural products
The FTA frees up 82% of agricultural imports from Mercosur to the EU, while maintaining quotas to protect European farmers.
Sustainability at the core of the agreement
What needs to happen before the FTA enters into force
The FTA must be ratified by EU member states and the European Parliament. France and Poland have expressed concerns over agricultural competition and environmental safeguards.
The EU may apply parts of the FTA provisionally before full ratification, as with other trade agreements, potentially accelerating trade-related provisions.
Legislative approval is required in all four Mercosur countries. Domestic political dynamics, economic priorities and environmental commitments will influence the process in each country.
Brazil’s ratification is considered the most strategically important given the size of its economy and its environmental commitments under the FTA.
The first-mover advantage is real. The window is now
In our experience advising European companies entering the Brazilian market, those who establish relationships, structures and market positions before a regulatory change is in force are consistently better placed than those who wait.
“Those EU businesses that start exploring opportunities in Mercosur countries ahead of the FTA coming into force will have a first-mover advantage. In our experience in Brazil, being a first mover is a key factor in achieving success.”
Deffenti Lawyers
Thinking about Brazil ahead of the FTA?
We advise European companies at every stage of their Brazil market entry, from initial structuring and regulatory assessment to ongoing legal support.
This page is a summary only and does not constitute legal advice. For the full article, visit LawsofBrazil.
Brazilian lawyers for foreign companies, investors and law firms.