Effective date: May 1, 2026.
Elimination of Customs Duties
Gradual reduction of tariffs on the vast majority of goods and services.
Mercosur will eliminate tariffs on 91 percent of European goods, either immediately or over transition periods of 4, 8, 10, or 15 years.
European Union will eliminate tariffs on 95 percent of Mercosur goods, representing 92 percent of the value of European imports of Brazilian goods, through immediate liberalization or linear reduction schedules over 4, 7, 8, 10, or 12 years.
| Area of Impact | Before the Agreement | Under the Agreement |
| Industrial Tariffs | High and protectionist | Progressive reduction to 0 percent |
| Agribusiness | Restricted quotas and surcharges | Expansion of quotas and elimination of barriers |
| Environmental Standard | Unilateral requirements imposed by the EU | Bilateral commitments subject to monitoring |
| Investments | Relative legal uncertainty | Mutual protection and WTO plus rules |
Immediate Gains for European Industry
As of provisional application, goods classified under immediate or near immediate tariff elimination (Category A) will benefit. Key industries exporting to Mercosur include:
Machinery and equipment
Automobiles and auto parts
Chemical products
Aircraft and transport equipment
Mercosur: Expanded Access to the European Market
Mercosur companies will benefit particularly in agribusiness, commodities, and food products, subject to quota regimes, safeguard mechanisms, and environmental compliance.
Quota Management and Special Regimes:
For products considered sensitive by the European Union, the agreement establishes export quota systems. Mercosur will be allowed to export specified volumes at zero or reduced tariffs, while exports exceeding such quotas will remain subject to regular duties.
The main EU agricultural concessions are summarized below:
| Product | Treatment |
| Beef | 99,000 metric tons carcass weight, 55 percent chilled and 45 percent frozen, with linear increase over five years. In quota tariff of 7.5 percent. The tariff under the Hilton Quota, 10,000 tons allocated to Brazil, currently set at 20 percent, will be eliminated upon the entry into force of the agreement. |
| Poultry meat | 180,000 metric tons carcass weight, 50 percent bone in and 50 percent boneless, with linear increase over five years and zero in quota tariff. |
| Pork | 25,000 metric tons, with linear increase over five years and an in quota tariff of EUR 83 per metric ton. |
| Sugar | 180,000 metric tons upon entry into force of the agreement, with zero in quota tariff. A specific quota of 10,000 metric tons for Paraguay will also apply with zero in quota tariff. |
| Ethanol | 450,000 metric tons of industrial ethanol, with linear increase over five years and zero in quota tariff upon entry into force. Additional 200,000 metric tons for other uses, including fuel, with linear increase over five years and an in quota tariff corresponding to one third of the applicable European tariff, either EUR 6.4 or EUR 3.4 per hectoliter. |
| Rice | 60,000 metric tons, with linear increase over five years and zero in quota tariff upon entry into force. |
| Honey | 45,000 metric tons, with linear increase over five years and zero in quota tariff upon entry into force. |
| Corn and sorghum | 1 million metric tons, with linear increase over five years and zero in quota tariff upon entry into force. |
| Orange juice | Depending on product format and commercial value, tariff elimination over seven or ten years, or a 50 percent preference margin. |
| Cachaça | Bottled products under two liters will be fully liberalized within four years. Bulk cachaça will be subject to a quota of 2,400 metric tons, with linear increase over five years and zero in quota tariff. |
| Cheese | 30,000 metric tons, with linear increase over ten years and a progressively reduced in quota tariff until elimination. Mozzarella is excluded. |
| Yogurt | Preference margin of 50 percent. |
| Butter | Preference margin of 30 percent. |
| Fruits | Products such as avocados, lemons, limes, melons, watermelons, table grapes, and apples will not be subject to quotas. |
The European Union may temporarily reintroduce tariffs if imports exceed predefined thresholds or if prices fall significantly below European market levels. These mechanisms apply to sensitive supply chains and aim to prevent abrupt impacts on European farmers
Mandatory Environmental Commitments:
i. Products benefiting from the agreement must not be associated with illegal deforestation.
ii. Environmental clauses are binding, and
iii. the agreement may be suspended in the event of violations of the Paris Agreement.
Trade in Services and Investments
The agreement reduces regulatory discrimination against foreign investors and advances market access in industries such as:
Financial services
Telecommunications
Transport
Business Services
Government Procurement
The agreement ensures preferential access to public procurement markets in the European Union and in Mercosur. Brazil’s specific commitments preserve policy space in areas such as industrial development, public health with full exclusion of procurement carried out by the Unified Health System, technology and innovation, small and medium sized enterprises, and small rural producers.
Intellectual Property Protection
The agreement consolidates international standards of intellectual property protection and reinforces the recognition of Brazilian geographical indications, such as “Cachaça” and “Canastra,” strengthening the “Brazil brand” in Europe. The chapter does not alter patent rules agreed within the World Trade Organization framework, a key consideration for health policy formulation in Brazil. The rights of geographical indication holders will be clearly defined, while safeguarding the rights of prior users in Mercosur countries with respect to protected geographical names.
Tax Impacts
With respect to direct tax impacts, the immediate effect relates to import duties, as these are directly affected by the announced tariff reductions.
Although the agreement does not eliminate other taxes levied on imports, it tends to reduce the overall tax burden of operations, since under the Brazilian tax system the import duty forms part of customs valuation and influences the taxable base of the Tax on Industrialized Products, PIS and COFINS on imports, and the State Value Added Tax.
Industries Immediately Benefited
Industrial industry
Agricultural industry
The SiqueiraCastro Advogados team is available to provide any necessary clarifications.
