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After Eight Years Of Negotiations, Mercosur And Efta Sign Treaty Creating Trillion-Dollar Economic Area, Eliminating Tariffs On Industrial And Fishing Goods And Expanding Access For Brazilian Exporters To High Purchasing Power Markets.
The Mercosur signed a free trade agreement on Tuesday (16) in Rio de Janeiro with the European Free Trade Association (Efta), composed of Switzerland, Norway, Iceland, and Liechtenstein.
The treaty provides for better market access for over 97% of exports on both sides, and for the Efta, complete elimination of tariffs on industrial and fishing goods as soon as the agreement enters into force.
The signing takes place after eight years of negotiations and creates an economic area of nearly 300 million consumers and a combined GDP of over US$ 4.3 trillion.
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According to the newspaper O Globo, for it to be valid, the text still depends on ratification by the parliaments of all countries, with no defined deadline.
What Was Signed And Who Benefits From It
The Mercosur-Efta agreement covers trade in goods and services, investments, intellectual property, government procurement, rules of origin, trade defense, sanitary and phytosanitary measures, technical barriers, dispute resolution, and a specific chapter on trade and sustainable development.
According to the governments, the Efta will eliminate 100% of import tariffs on the industrial and fishing sectors as soon as it comes into effect.
From the South American side, there will be tariff reduction schedules and preferences that liberalize 97% of trade.
Considering agricultural and industrial segments, Brazilian free trade access to Efta markets is expected to reach almost 99% of exported value.
Imports May Become Cheaper
With the removal of barriers and customs simplification, items from Efta countries, such as Swiss chocolates, medications, and Norwegian cod, are expected to arrive in Brazil at lower prices.
The reduction of logistical costs and regulatory predictability also plays a role in this.
“Regulatory predictability and the simplification of customs procedures will allow companies to import with greater legal security, lower costs, and increased competitiveness,” says Michel Platini, president of the Brazilian Importers Association.
Brazilian Industry Will Have Access To High Purchasing Power Market
The Efta totals around 15 million inhabitants with high per capita income, which interests the Brazilian industry and service exporters.
For the Vice President and Minister of Development, Industry, Trade and Services, Geraldo Alckmin, “the conclusion of this agreement is yet another result of the Brazilian government’s efforts to diversify markets and expand Brazil’s network of trade agreements, as well as those of Mercosur.”
According to him, the understanding “is an important signal in favor of international trade as a factor for economic growth and prosperity for peoples”.
US Tariff Accelerates Mercosur Negotiations
The 50% tariff imposed by the United States on a wide range of Brazilian products has led exporting sectors to seek new markets and trade agreements.
In this context, Mercosur sees the pact with Efta as a catalyst to conclude other understandings and reduce dependence on markets subject to unilateral measures.
Public and private interlocutors argue that progress with high-income countries reinforces the negotiating credibility of the South American bloc.
Brazilian Sectors With Export Potential
Sectors affected by US tariffs, such as footwear, machinery and equipment, meat, and furniture, believe that the additional opening in Efta may offset some of the losses.
In livestock, the expectation is to gradually increase sales of beef — currently modest compared to other destinations.
“It’s small, but it adds up. No one accomplishes a great work at once. A great work is done with several small works,” says Roberto Perosa, president of the Brazilian Meat Exporters Association.
In the footwear sector, expectations are significant given the volume of imports from Efta.
The bloc purchases over US$ 3 billion annually in footwear, with a strong share of leather, textiles, and synthetics, but Brazil still accounts for less than 1% of this market.
For Priscila Linck, an economist at Abicalçados, “the agreement should yield positive results in terms of trade facilitation and access of Brazilian footwear exports to the markets.”
The machinery and equipment industry also aims for gains.
José Velloso, from Abimaq, emphasizes the scope of the treaty and sees a reinforcement of “juridical predictability and security” for companies and investors.
Internal studies from the sector and CNI point to significant opportunities in capital goods, with potential for integration into high-value chains in Efta countries.
In the furniture sector, Efta countries highlight the demand for design, quality, and sustainability, characteristics already explored by part of the Brazilian industry.
For Cândida Cervieri, executive director of Abimóvel, the agreement opens space to expand destinations and reduce dependence on a few buyers, although the implementation of the rules needs to be closely monitored by the sector.
Efta Concluded And European Union In Negotiation
The conclusion of the text with Efta does not end Mercosur’s external agenda.
Gabriella Dorlhiac, executive director of ICC Brazil, classifies the outcome as strategic for deepening integration into global chains and sustaining the expectation of expanding the country’s network of agreements.
There are, however, important distinctions.
While the pact with Efta has been signed and awaits only internal ratifications, the Mercosur–European Union agreement is still in formal approval stages in the EU before final signing by the member states.
For political scientist Denilde Holzhacker (ESPM), progress with Efta shows negotiating traction within Mercosur, including due to pressure from Argentina and Uruguay.
“The signaling is positive, it has an impact on business, but it is not yet the big agreement,” she says, reminding that the understanding with the European Union remains the main expectation of the bloc.
Rules, Deadlines, And Safeguards
As is the case with treaties of this magnitude, there will be different schedules for tariff elimination by product, as well as tariff quotas for sensitive items.
The chapter on government procurement opens the way for suppliers on both sides to participate in bids above certain thresholds.
In the sanitary and phytosanitary axis, the text includes dialogue and transparency mechanisms to avoid unjustified barriers.
In terms of sustainability, commitments on climate, biodiversity, combating deforestation, and best labor practices are included.
Although Efta eliminates industrial and fishing tariffs immediately upon entry into force, many agricultural concessions will be gradual and, in some cases, conditional on quotas.
Meanwhile, trade defense instruments and safeguard clauses remain available to respond to potential market distortions.
Next Steps Of The Agreement
With the signing, the political phase of ratification begins in each country, a stage that usually takes months or years depending on legislative calendars and domestic debates.
In the meantime, governments and companies are rushing to map rules of origin, adapt processes, and identify tariff lines that will have quicker reductions, anticipating competitive gains.
Authorities and industry representatives assess that the combination of predictability, cost reduction, and expanded access can favor Brazil’s insertion in higher value-added segments.
It remains to be seen: which sectors will be able to turn this opening into contracts, investments, and quality jobs first?
Claro que o Brasil nao tem interesse em zerar imposto, e mais compreensão esse governo ai? Vai nunca para a frente esse acordo
Só a gororoba. Esse acordo foi assinado em 2019 e está é uma renovação dos termos, não o acordo em si. Uma rápida pesquisa sobre o acordo EFTA mostra a data de assinatura em 2019. Esse pessoal gosta de vomitar asneiras. E detalhe, essa assinatura não muda nada agora, primeiro vai passar pela aprovação de ambos os blocos. Como dizem propaganda é a alma do negócio mas uma alma sem corpo não faz nada.
Senhores e senhoras o mundo é grande muito grande. EUA é um pequeno grão de areia. Vamos aproveitar esse momento para diversificar as vendas de nossos produtos de agropecuária para o mundo. “BRASIL CELEIRO DO MUNDO”.