EU-MERCOSUR free trade agreement – negotiations successfully concluded!

On December 6, 2024, the long-standing negotiations between the European Union and the MERCOSUR countries (Brazil, Argentina, Uruguay and Paraguay) on a joint free trade agreement were successfully concluded.

In contrast to the policy of the US President-elect, the MERCOSUR free trade agreement aims to promote free trade between the MERCOSUR states and the EU by reducing tariffs and at the same time taking environmental aspects into account. The free trade agreement leads to various benefits for both sides, including:

• EUR 4 billion worth of customs duty savings for EU companies, i.e., strengthening the EU’s economic performance,
• Developing strategic economic relations and political partnerships to secure and diversify supply chains,
• EU companies can bid for public contracts in the MERCOSUR countries on the same terms as MERCOSUR companies,
• Exclusive preferential access to some critical raw materials and environmentally friendly goods,
• Combating climate change, including through mandatory recognition of the Paris Agreement for both sides,
• Reducing bureaucracy, which helps small and medium-sized enterprises to expand their exports. In particular, simpler and less complicated customs procedures to facilitate exports.

The EU Commission has published the most important facts in a fact sheet. 

Entry into force of the MERCOSUR free trade agreement

The agreement will not enter into force immediately. The wording of the agreement still needs to be legally reviewed and translated into the languages of both parties’ member states. The agreement will then be approved by the competent bodies of the European Union and Mercosur and incorporated into the legal systems of both parties’ countries. There is no deadline for these steps. Germany and Brazil, the largest economies in the European Union and Mercosur, respectively, officially support a swift implementation of the agreement. However, there is still resistance to the agreement across Europe, particularly in the agricultural sector..

Recommendation for action

We recommend that all companies check to what extent they can benefit from the new free trade agreement. If you are already trading with the MERCOSUR countries, the free trade agreement may offer customs duty savings. If you do not yet have trade relations with the MERCOSUR countries, you may be able to tap into new and lucrative markets.

Our customs and foreign trade experts are also available for training, optimization of customs processes and business transactions and to answer your questions in the areas of customs, excise duties, foreign trade, export control including interface consulting, for example, on transfer prices, VAT or general legal advice.

Please feel free to contact us for a non-binding initial consultation.