International Trade
The free trade agreement between Mercosur and the European Union, signed on June 28, is the most important trade agreement signed by Brazil in the past decades, and it will bring great opportunities and challenges for Brazilian companies. The agreement is still under legal review and, in the following, it will be submitted to the ratification process of each party, which should take several months. Nonetheless, its entry into force shall bring immediate impacts.
The agreement establishes progressive tariff reductions for more than 90% of the imports between the two blocks, and immediate elimination of tariffs for some sectors. To benefit of such market access, imported goods must comply with the rules of origin established under the agreement – which present specificities for each sector. The free trade agreement also provides for increased market access in services and government procurement.
Moreover, there are relevant provisions on technical barriers to trade, sanitary and phytosanitary measures, bilateral safeguard mechanism, and rules on intellectual property and sustainable development, amongst others.
In this sense, companies should begin to prepare themselves and to study the opportunities and challenges brought by the agreement, such as the possibility of exportation to new markets, the acquisition of imported inputs at a reduced cost, the restructuring of supply chains, the reduction of technical barriers to trade and the internationalization of services, amongst others.
In the following weeks, we will publish a series of newsletters on the main themes of the agreement, providing the analysis of the major issues that should be observed by companies so they can adapt to this new scenario.