The trade agreement between the European Union and Mercosul was officially signed on January 17 in Asunción, Paraguay, after 26 years of negotiations. Learn about the opinion of Guilherme Athia, a specialist in Brazilian institutional affairs with solid experience in Europe, on the impact on exporting companies on both sides of the Atlantic.
The ceremony was attended by the President of the European Commission, Ursula von der Leyen, and the President of the European Council, António Costa. The signatories included representatives of the Mercosul countries, Argentina, Brazil, Paraguay, and Uruguay, as well as the European Commissioner for Trade, Maroš Šefčovič.
The pact opens a joint market of more than 700 million consumers, allowing for the gradual elimination of tariffs on 91% of EU exports to Mercosul and 92% of South American sales to Europe. Together, the two blocs encompass 31 countries and represent about a quarter of the global economy, with the potential to reduce or eliminate tariffs on approximately 90% of their imports and exports.
Mercosul’s agricultural sector will be one of the main beneficiaries, while European industry gains access to a market that has historically been closed to products such as electrical equipment, machinery, and automobiles.
Guilherme Athia, an expert in Institutional Decision-Making, explained in an interview with Media em Movimento that “each country that approves it joins the agreement. There is very strong complementarity among industrialized European countries. For example, Germany, Italy, France, Sweden, Denmark.”
In Brazil’s case, these countries already invest significant amounts and show strong interest in areas such as machinery, automobiles, pharmaceutical and chemical products, sectors that are especially attractive to their economies. “These are very interesting sectors for those countries,” commented Guilherme Athia.
In addition, “in the case of Italy, it also includes the export of food products and high value-added goods, which are very well received in Brazil, a country with a strong Italian culture. Beyond that, of course, automobiles and machinery, fashion, design, furniture, etc.”
Products with Protected Designations of Origin
Brazilian agribusiness may gain prominence under the new trade agreement with European countries, but with clear limits. “On Brazil’s side, what is known is that there is very strong interest from the Brazilian agribusiness perspective, but there are quotas, that is, it will not be an invasion of Brazilian products here (in Europe),” said Guilherme Athia.
Some Brazilian products will also receive special protection, ensuring international recognition. “Some products are very interesting to analyze because they will receive controlled designation of origin status. For example, Brazilian cachaça, the sugarcane spirit made in Brazil. It becomes a product with this characteristic, like champagne, which can only be produced in the Champagne region of France. Or like Parmesan cheese, in the Parma region, and so on.”
In Portugal, there are several examples of this type of protection, which represents an opportunity for Brazilian products. “Here in Portugal there are several, and this has an interesting characteristic for Brazilian products. Although it is an industry in crisis, it is at a decisive moment, alcoholic beverages, especially distilled spirits, may lose a lot of market share,” the specialist added.
For Guilherme Athia, the agreement emerges in the context of a reorganization of multilateralism and U.S. trade policies. “What happens is that this agreement arises largely as a result of a reorganization of multilateralism and U.S. trade policies. So an agreement that had been repeatedly postponed ended up becoming urgent, so to speak, for both sides of the Atlantic. It was therefore signed and is now going through both parliaments and will be implemented.”
Guilherme Athia believes the agreement will bring long-term benefits. “I think we are only at the beginning. It is a gigantic agreement, extremely complex, quite asynchronous, and congratulations to the negotiators on both sides of the Atlantic for its conclusion. I believe there will be far more benefits than challenges in this initial phase, and also in the future there will certainly be much more stability for those engaged in this type of international activity.”
As for Brazilian companies, expectations are that they will be able to better explore the European market, especially medium-sized and small firms. “Regarding specific Brazilian companies, I believe they will begin to better understand how medium-sized and small companies operate, because large ones already understand this quite well. But understanding how the European Union works, the free trade agreement will make it possible to enter all countries in the European free market. I think this is also an opportunity for Portugal in this regard.”