TRADE
Brazil set to win big with EU deal
Presidents Lula of Brazil and Ursula von der Leyen from the European Commission. Photo: Ricardo Stuckert/PR
The European Council on Friday approved the European Union’s long-delayed trade agreement with Mercosur, the South American bloc that includes Brazil, Argentina, Paraguay, Uruguay and Bolivia. The deal is scheduled to be formally signed this Saturday, January 17.
The agreement would eliminate tariffs on 91% of EU exports and 92% of Mercosur exports, with some duties removed immediately and others phased out. “[Friday] was a historic day for multilateralism,” Brazilian President Luiz Inácio Lula da Silva said when reacting to the news.
If fully implemented, the agreement would create a trade zone accounting for about 17% of global GDP (measured by purchasing power parity) and roughly 9% of the world’s population. While closer to reality than ever, the pact is still to be ratified by the European Parliament and then by the national legislatures of the Mercosur countries.
In the South American bloc, the agreement will be implemented by individual member states as soon as that country’s lawmakers approve it.
👉 Why it matters. According to several projections, Brazil is expected to be the agreement’s biggest beneficiary. The deal is seen as so advantageous that even the National Confederation of Industry (CNI), long a stronghold of Brazilian protectionism, has expressed support for its signing and implementation — calling the agreement “a significant step to advance Brazil’s international insertion and to strengthen national industry.”
A recent study by Brazil’s Institute for Applied Economic Research (IPEA) offers one of the most detailed projections to date of what the deal could mean in practice. Its conclusion is clear: the deal is great for Brazil, but its benefits will not be distributed evenly…
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