Treaty approved by Brazil provides preferential access for nearly 99% of the country’s exports to the bloc comprising Switzerland, Norway, Iceland, and Liechtenstein, but its entry into force still depends on ratification by the partner countries
Brazil has completed its part of the ratification process for the free trade agreement between Mercosur and the European Free Trade Association (EFTA), comprising Switzerland, Norway, Iceland, and Liechtenstein. On June 30, the Brazilian government deposited the instrument of ratification for the treaty, which was signed in Rio de Janeiro in September 2025.
The agreement is not yet in force, but Brazil’s progress brings the opening of a new European market closer for exporters and importers. Under the terms of the treaty, the agreement may begin to apply among countries that have completed their respective domestic procedures, without the need to await ratification by all eight signatories.
The text establishes that the agreement will enter into force on the first day of the third month following the deposit of the instruments by at least one Mercosur country and one EFTA member. For countries that complete the process at a later date, the agreement will enter into force on the first day of the third month following their respective deposit. Norway is the formal depositary of the treaty.
Negotiations began in June 2017 and went through 14 rounds. Following a political understanding reached in 2019, the negotiations were resumed and updated in 2025. The agreement was signed on September 16 of that year in Rio de Janeiro.
In Brazil, the text was approved by the Chamber of Deputies and the Federal Senate in June 2026. The government deposited the instrument of ratification on June 30. Uruguay also completed its parliamentary approval in June, while the process is advancing at different rates in the other countries.
A Market Small in Population, but High in Income
EFTA has approximately 15 million inhabitants, a relatively small population compared with the European Union. Its four members, however, are among the world’s highest-income economies in per capita terms and have a combined estimated gross domestic product of US$1.4 trillion.
Together, Mercosur and EFTA represent a market of approximately 290 million consumers and a GDP exceeding US$4 trillion.
For Brazil, the main economic effect will be the reduction of import tariffs. According to the federal government, the agreement will guarantee tariff-free access for nearly 99% of the value currently exported by the country to EFTA markets. Considering trade between the two blocs, more than 97% of exports are expected to receive some improvement in market access.
Upon the agreement’s entry into force, EFTA countries will eliminate tariffs on industrial goods, fish, and other marine products originating in Mercosur. The South American bloc, in turn, will gradually reduce or eliminate tariffs on most industrial products originating in EFTA.
The timetable will therefore not be uniform. While EFTA’s concessions will apply immediately, part of the market opening undertaken by Mercosur will take place over transitional periods, particularly in sectors considered more sensitive.
Agribusiness Will Benefit from Quotas and Preferences
In the agricultural sector, the agreement combines tariff elimination, partial reductions, and preferential quotas.
Brazilian products such as beef, pork, poultry, corn, honey, roasted coffee, rice, fruit, juices, molasses, soybean meal, tobacco, and ethyl alcohol may gain improved access to EFTA markets.
The concessions, however, vary among the four countries. According to the Ministry of Development, 100% of Brazilian exports currently destined for Iceland and Liechtenstein are included in the tariff-free schedules. The percentage reaches 99.8% for Norway and 97.7% for Switzerland.
On the Brazilian side, agricultural products considered sensitive will not necessarily be subject to the full and immediate elimination of tariffs. In some cases, such as certain dairy products, chocolates, and food preparations, access will be administered through tariff-rate quotas or limited concessions.
For agribusiness, the actual benefit will depend on more than tariffs alone. Sanitary and phytosanitary requirements, rules of origin, certifications, traceability, and residue limits will remain decisive in determining whether Brazilian products can effectively enter these markets.
The Agreement Goes Beyond Tariffs
Although the opening of trade in goods is its most visible effect, the treaty is broader in scope. Its 16 chapters also address trade in services, investment, intellectual property, government procurement, competition, trade remedies, safeguards, technical barriers to trade, sanitary and phytosanitary measures, sustainable development, and dispute settlement.
The investment chapter provides for national treatment commitments and facilitates the movement of key personnel, while expressly preserving the countries’ right to regulate economic activities within their territories.
The agreement also expands the protection of Brazilian geographical indications. In total, 63 Brazilian indications are expected to be recognized in EFTA countries, which may benefit products associated with a particular regional origin and strengthen their commercial differentiation.
In government procurement, the parties undertake commitments regarding transparency, non-discrimination, and access to certain public tenders. The chapter also provides for measures intended to facilitate the participation of micro, small, and medium-sized enterprises.
Bilateral Trade Reached US$7.8 Billion
In 2025, total trade between Brazil and the four EFTA countries reached US$7.8 billion. Brazilian exports amounted to US$3.8 billion, an increase of 22.9% compared with the previous year.
The elimination of tariffs may improve the competitiveness of Brazilian products, but it will not produce automatic results. Distance, logistics costs, regulatory requirements, environmental and sanitary standards, and the consumption profiles of EFTA countries will continue to influence the extent to which the agreement is used.
Brazilian companies will need to determine not only whether a product is included in the tariff reduction schedule, but also whether it complies with the rules of origin. Without proof of origin as required by the treaty, the goods will not be eligible for preferential tariff treatment.
Importers will also need to monitor the schedules applicable to each country, since reductions in Brazilian tariffs may be gradual and may vary depending on the product.
A New Phase of Trade Liberalization
The agreement with EFTA forms part of a broader expansion of Mercosur’s trade agenda.
Since May 1, 2026, the Mercosur-European Union Interim Trade Agreement has been in force for Brazil. The instrument brings forward the application of the trade component of the broader agreement concluded between the two blocs.
The free trade agreement with Singapore, in turn, will enter into force for Brazil on August 1, 2026. Singapore will immediately eliminate tariffs on Mercosur products, while the South American bloc will gradually open its market.
The Brazilian government has also launched a public consultation on trade negotiations between Mercosur and Japan, following the launch of a strategic partnership between the two sides in late 2025.
This movement is taking place in a context of increasing tariff disputes, geopolitical tensions, and the reorganization of global production chains. By expanding its network of agreements, Mercosur seeks to diversify its partners, reduce the concentration of its trade relations, and provide companies in the region with improved access to high-income markets.
What Companies Should Do Now
Brazil’s ratification does not mean that the preferences can already be used. Companies trading with EFTA countries should monitor the date on which the agreement enters into force in each bilateral relationship.
They will also need to assess the tariff classification of each product; the applicable tariff reduction schedule; the rules of origin and supporting documents; the existence of quotas or quantitative limits; sanitary, technical, and regulatory requirements; and the customs procedures established by the importing countries.
The formal opening of the market is only the first step. Effective use of the agreement will depend on companies’ ability to identify opportunities, adapt their products and processes, and comply with the requirements of sophisticated and highly regulated markets.
By Julia Borges da Mota and Thiago Bandeira
Source: Monitor Mercantil
Photo: Canva
