Mercosur–EU agreement explained in 13 points

After more than 25 years of negotiations, the trade agreement between Mercosur and the European Union (EU) was approved this Friday (9) by the EU Council. Expected to be signed on January 17 in Asunción, Paraguay, the treaty lays the foundations for the world’s largest free trade area, covering around 700 million people.

While welcomed by governments and industrial sectors, the agreement still faces resistance from European farmers and environmental groups, who warn of potential impacts on climate policy and agricultural competition. Implementation will be gradual, and its practical effects are expected to unfold over several years.

Following formal signature, the agreement will still need approval by the European Parliament. Provisions that go beyond trade policy, such as technical agreements, will require ratification by EU national parliaments, which could extend the timeline and open space for disputes.

Below are the main points of the agreement:

1. Elimination of customs tariffs

– Gradual reduction of tariffs on most goods and services;
– Mercosur: will eliminate tariffs on 91% of European goods within up to 15 years;
– European Union: will eliminate tariffs on 95% of Mercosur goods within up to 12 years.

2. Immediate gains for industry

– Zero tariffs from the outset for several industrial products.

Benefiting sectors:

– Machinery and equipment;
– Automobiles and auto parts;
– Chemical products;
– Aircraft and transport equipment.

3. Expanded access to the European market

– Mercosur companies gain preferential access to a high-income market;
– The EU has an estimated GDP of US$22 trillion;
– Trade is expected to become more predictable, with fewer technical barriers.

4. Quotas for sensitive agricultural products

– Products such as beef, poultry, rice, honey, sugar and ethanol will be subject to import quotas;
– Above these quotas, tariffs will apply;
– Quotas increase over time with reduced tariffs, rather than allowing unrestricted access;
– The mechanism aims to avoid abrupt impacts on European farmers;
– In the EU, quotas correspond to 3% of goods or 5% of the value imported from Brazil;
– In the Brazilian market, they reach 9% of goods or 8% of value.

The following chart shows the top most exported commodities, transported in containers, from Brazil to the 27 countries in the European Union from January through November 2025. The data was collected and processed by Datamar. Readers may request a demo below.

Top Exports | Brazil to EU | 2025 | TEUs

Source: DataLiner (click here to request a demo)

5. Agricultural safeguards

The EU may temporarily reintroduce tariffs if:

– Imports grow beyond predefined limits;
– Prices fall well below EU market levels;
– Measures apply to sectors considered sensitive.

6. Binding environmental commitments

– Products benefiting from the agreement cannot be linked to illegal deforestation;
– Environmental clauses are binding;
– The agreement may be suspended in case of violations of the Paris Agreement.

7. Sanitary rules remain strict

– The EU will not relax sanitary and phytosanitary standards;
– Imported products must continue to comply with strict food safety rules.

8. Trade in services and investment

Reduction of regulatory discrimination against foreign investors.

Advances in sectors such as:

– Financial services;
– Telecommunications;
– Transport;
– Business services.

9. Public procurement

– Mercosur companies will be able to bid for public tenders in the EU;
– Rules will be more transparent and predictable.

10. Intellectual property protection

– Recognition of around 350 European geographical indications;
– Clear rules on trademarks, patents and copyrights.

11. Small and medium-sized enterprises (SMEs)

– Dedicated chapter for SMEs;
– Trade facilitation measures and improved access to information;
– Lower costs and reduced bureaucracy for small exporters.

12. Impact on Brazil

– Potential increase in exports, especially in agribusiness and industry;
– Greater integration into global value chains;
– Possible attraction of foreign investment in the medium and long term.

13. Next steps

– Signature scheduled for January 17 in Paraguay;
– Approval by the European Parliament;
– Ratification by the congresses of Brazil, Argentina, Paraguay and Uruguay;
– Entry into force only after completion of all procedures;
– Provisions beyond trade policy require approval by each country’s parliament.

Source: Agência Brasil

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