The Brazilian House of Representatives has approved the free trade agreement between Mercosur and the European Free Trade Association (EFTA), comprising Switzerland, Norway, Iceland and Liechtenstein, which is still pending review by the Senate. The treaty provides for the liberalization of approximately 97% of bilateral trade, including the immediate elimination of tariffs on Mercosur’s industrial exports and a gradual tariff reduction by the South American bloc over a period of up to 15 years.
Even before its entry into force, the progress of the agreement already calls for legal and strategic attention from Brazilian companies. From a tax and commercial standpoint, businesses will need to reassess pricing structures, contracts and supply chains in light of the expected tariff reductions. Rules of origin will also gain importance, as compliance will be essential to benefit from the agreement, requiring operational and documentary adjustments.
In addition, the treaty establishes comprehensive disciplines in areas such as services, investments, intellectual property and government procurement, enhancing regulatory predictability and introducing new standards of competition. In the agribusiness sector, mechanisms such as the recognition of sanitary certifications (pre-listing) are expected to reduce operational barriers, while also requiring close attention to applicable technical and regulatory requirements. At the same time, trade liberalization is likely to intensify competition, particularly in sensitive sectors, potentially demanding efficiency gains and strategic repositioning.
On the other hand, the agreement creates relevant opportunities, including expanded access to high-income markets, the potential increase of foreign investment in Brazil and greater legal certainty in international trade relations.
The legal effects of the treaty will depend on the completion of the ratification process and its formal entry into force. Until then, companies engaged in or planning to engage in international trade are likely to benefit from early preparation, assessing impacts and adjusting their strategies to capture opportunities and mitigate risks.
Companies should begin evaluating the impacts of the agreement on their operations now. The multidisciplinary team of TozziniFreire is available to support clients throughout the entire process.
