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Mercosur begins operating new agreement with the European Union, opens one of the world’s largest free trade zones, and positions Santa Catarina with gains for agribusiness through tariff reduction and challenges for industry.
Mercosur will begin operating, starting May 1st, the new trade agreement signed with the European Union after 27 years of negotiation. The measure was formalized by President Luiz Inácio Lula da Silva on Tuesday, the 28th, and foresees the gradual reduction of tariffs for most products traded between the two blocs, opening a new phase in economic relations between South America and Europe.
In Santa Catarina, the impact of the agreement draws attention because it directly affects two pillars of the state’s economy. On one hand, agribusiness appears as the area with the greatest potential for gain, driven by Santa Catarina’s competitiveness in the agricultural sector. On the other hand, the state’s industry is on alert due to the possibility of stronger competition with European segments considered more efficient, especially in more sensitive industrial areas.
What the Mercosur and European Union agreement changes in practice
The main effect of the new treaty is the creation of more favorable conditions for trade between the blocs, with a gradual reduction of tariffs for most traded products. This tends to facilitate the circulation of goods and expand access to markets that previously faced greater barriers.
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In practice, the agreement places Mercosur within one of the world’s largest free trade zones. This move can expand export opportunities, generate more predictability for negotiations, and alter the competitive dynamics of important sectors of the Brazilian and Santa Catarina economies.
Why Santa Catarina is among the states most attentive to this agreement
Santa Catarina is at the center of this debate because it has a strong presence in agribusiness and agroindustry. The state is considered the largest producer and exporter of pork in Brazil, in addition to standing out in the production of onions, poultry, apples, and mariculture.
This productive profile helps explain why the new Mercosur agreement is seen as especially relevant for the state. With lower tariffs and expanded access, sectors linked to agriculture and food production can find a more favorable environment to grow and negotiate competitively.
Santa Catarina’s agribusiness is expected to be the biggest beneficiary
The assessment presented is that Santa Catarina’s agribusiness tends to be the sector most benefited by the reduction of tariffs. The explanation lies in Brazil’s competitiveness in agriculture, a point that, according to the economist cited in the analysis, was at the center of the long negotiation with the European Union.
The understanding is that the European agricultural sector’s resistance over the years precisely demonstrates Brazil’s strength in this market. For Santa Catarina, this means that the Mercosur agreement can open space to better leverage the state’s export vocation and expand its presence in international markets.
The numbers and factors that explain Santa Catarina’s weight in this scenario
The agreement gains even more relevance when observing the recent weight of Santa Catarina’s economy in the food sector. In 2024, Santa Catarina broke a historical record and led the exports of meats produced in the country, reinforcing its strategic position in foreign trade.
Furthermore, the state brings together a diversified production base, with emphasis on swine, poultry, apples, onions, and mariculture. This set of activities helps support the expectation that the new agreement between Mercosur and the European Union will have a concrete impact on Santa Catarina’s economy.
Santa Catarina’s industry also sees opportunities, but under more pressure
If agribusiness appears as the main potential winner, Santa Catarina’s industry enters a more complex scenario. The assessment is that some European industrial segments are more efficient than those in Brazil, which could increase competition and generate negative effects for national workers in certain areas.
The example cited is the automotive sector, used to illustrate how the European industry can excel in some segments. This means that the Mercosur agreement not only brings an expansion of opportunities but also a more competitive environment for part of Santa Catarina’s industrial sector.
What can reduce risks for local producers
Despite the expected pressure in some segments, the federal government has already anticipated measures to avoid possible losses. Among them is the provision for temporary protection for local producers, a mechanism that can help soften the initial impacts of new international competition.
Another highlighted point is that the economic effects are not treated as definitive. The analysis reminds us that the economy is dynamic and that other factors can also help the national industry, which opens space for adaptation and new competitive arrangements over time.
Why Fiesc maintained a positive view on the agreement
Even with warnings for part of the industry, the Federation of Industries of the State of Santa Catarina adopted an optimistic discourse regarding the treaty. The president of Fiesc, Gilberto Seleme, stated that the agreement opens a new stage of international insertion, with market expansion and more favorable conditions for negotiations with competitiveness and predictability.
This reading shows that, even in the face of risks, there is an expectation that Mercosur will help create a more open environment for Santa Catarina companies. The gain, in this case, would not only be in tariff reduction but also in building a more stable scenario for trade relations with the European Union.
Why this agreement attracts so much attention after almost three decades
The political and economic weight of the treaty is also linked to the negotiation time. It took 27 years until the officialization of the agreement, which shows the magnitude of the interests involved and the historical difficulty in aligning demands between two such relevant blocs.
This long journey helps explain why the start of its enforcement on May 1st is treated as a milestone. The Mercosur agreement not only alters tariffs but inaugurates a new phase of trade relations that can influence exports, competitiveness, and economic strategies in states like Santa Catarina.
What this means for Santa Catarina’s economy in the coming months
In the coming months, the expectation is that Santa Catarina’s agribusiness will carefully observe the new possibilities opened by the agreement, while the industry monitors the advance of European competition and the protection mechanisms promised by the federal government.
In summary, the new agreement between Mercosur and the European Union places the state before a combination of opportunity and challenge. Agribusiness tends to take the lead with market expansion and tariff reduction, while industry will need to carefully measure the effects of the new trade dispute.
Do you think Santa Catarina will be able to transform the new agreement between Mercosur and the European Union into more gains than risks for its economy?
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