Mercosur-EU Agreement: CNA explains what changes for producers.

After more than two decades of negotiations, the Mercosur-European Union Agreement will provisionally come into effect from Friday (1st). The treaty foresees the gradual reduction of tariffs for most products traded between the two blocs. The Brazilian Confederation of Agriculture and Livestock (CNA) was present in the negotiations defending Brazilian agriculture and will continue to stand alongside rural producers in this new stage of trade between the two blocs. “It is the largest agreement ever negotiated by Mercosur and it completely changes the way Brazil relates commercially with the countries of the European Union. The impacts for Brazilian agriculture are enormous. On the one hand, a range of opportunities for increased exports and, on the other, challenges arising from greater exposure to European products,” said Sueme Mori, director of International Relations at CNA. To help rural producers, CNA is developing a series of educational materials, technical notes, guides, analyses, and tools that can translate into the reality of the field what will change with the new trade rules between the two blocs. See below some of the main questions about the impacts of the Mercosur-European Union Agreement. :: What is the agreement? The European Union-Mercosur Agreement is a free trade treaty signed between the Mercosur countries (Brazil, Argentina, Paraguay and Uruguay) and the European Union. Its objective is to facilitate trade, investment and economic cooperation between the two blocs, through the reduction or elimination of import and export tariffs, the creation of more predictable rules and the strengthening of regulatory dialogue. The agreement is broad, involving agricultural and industrial products and issues related to sustainability, technical standards and trade defense. :: Why is the agreement still provisional? Because the commercial part of the agreement comes into effect before final approval by all countries of the European Union. This allows benefits, such as tariff reductions, to begin to be applied while the agreement is still under analysis in the European parliaments. :: When will the agreement be fully in force? Definitive entry into force depends on the approval of the European Parliament and the national parliaments of the member countries of the European Union. This process may take longer, as it involves different legislative steps. :: What changes in import tariffs with the implementation of the Agreement? The agreement foresees a gradual reduction of import tariffs between the two blocs. The European Union should eliminate tariffs on approximately 93% of Mercosur products within 10 years, while Mercosur will do the same for approximately 91% of European products within a period that could reach 15 years. In the first year of implementation, approximately 39% of Brazilian agricultural products exported to Europe will have zero tariffs, mainly those in which Brazil already has a strong presence in the international market. :: How long will it take for the tariffs to be eliminated? It depends. The time varies according to the product, but, in general, tariffs can be eliminated within 10 years for exports destined for the European Union and within 15 years for products imported by Mercosur. The rules of the Agreement seek to avoid an abrupt opening of the market. Products considered sensitive, both in Brazil and Europe, have transition periods, quotas, and safeguards, precisely to allow local producers to adapt. To reiterate: each product has a specific schedule, which may vary according to the sector's sensitivity level. Products considered more sensitive tend to have longer tariff reduction periods. :: Does the tariff reduction take effect from May 1st? Yes. The gradual reduction of tariffs begins as of the provisional date. This means that Brazilian products tend to become more competitive in the European market, while European products also begin to arrive in Brazil at lower prices. :: Are there products outside the scope of the Agreement? Yes. Not all products were included in the agreement, and some received special treatment. Therefore, it is essential that the producer consults the so-called "Agreement Simulator" and confirms with their partner in the destination country to obtain a formal answer regarding a specific product. The "Agreement Simulator" serves as a guide and should be checked with customs authorities before initiating an export process. :: Does the agreement bring more commercial predictability for agricultural products? Yes. The agreement brings greater commercial predictability, a gradual reduction in tariffs, potential access to a large consumer market, and increased value for typical Brazilian products. :: So, will the Agreement facilitate exports? The Agreement expands quotas, reduces tariffs over time, and establishes clearer rules, which tends to facilitate export planning. In other words, the agreement improves commercial conditions, but it does not replace the sanitary, technical, and environmental requirements of the European Union. This is a central point for producers to understand how the Agreement actually works. :: What is the difference between market access and market opening? Market access is related to the commercial conditions foreseen in the Agreement, such as tariffs and quotas. Market opening depends on sanitary recognition, the authorization of establishments, and the acceptance of the exporting country's control systems. A product may have a reduced or even zero tariff and still not be authorized to export to the European Union due to sanitary issues. This also applies to EU products here in Mercosur. :: How does the Agreement affect imports of products from the European Union? The opening occurs gradually, with the use of quotas and safeguards, allowing Brazilian producers time to adapt to the competition. :: Can small and medium-sized producers benefit from the agreement? Yes. The agreement provides for cooperation, encouragement of productive organization and valorization of, for example, regional products. Many opportunities occur indirectly, through cooperatives and exporting agro-industries. :: So, does the agreement create opportunities for the sector? Yes. The agreement creates opportunities, but the results depend on factors such as productivity, scale, health, traceability and access to technical assistance and credit. The better prepared producer tends to take greater advantage of the benefits. :: What are tariffs and "tariff quotas" foreseen in the Agreement? – A tariff is a tax levied on imported products. It serves to protect the domestic market and can directly influence the competitiveness of a product in the destination country. :: The higher the tariff, the more expensive the imported product tends to be. – Tariff quotas define a maximum quantity of product that can be imported with a reduced or zero tariff. This volume is called "intraquota". When the quota limit is exceeded, the product can still be traded, but it starts paying a higher tariff, called "extraquota". :: What are the safeguards foreseen in the agreement? Safeguards are trade defense instruments that allow the temporary suspension of the tariff benefits of the agreement when a sudden increase in imports causes or threatens to cause significant harm to the domestic productive sector. :: How do safeguards work on the European Union side? The European Union can apply safeguards when it identifies an accelerated increase in imports from Mercosur, especially of products considered sensitive, and a risk of damage to its local production. :: Can Brazil also apply safeguards? Yes. The agreement provides for bilateral safeguards, applicable by both the European Union and Brazil. In the Brazilian case, these safeguards were regulated by Decree No. 12,866/26, which establishes the procedures for investigation, damage analysis, and eventual temporary suspension of tariff preferences granted in the agreement. This decree guarantees legal certainty and ensures that Brazilian producers are not left unprotected in the face of trade liberalization. :: Does the agreement reduce the sanitary requirements of the European Union? No. The agreement does not reduce sanitary or environmental standards. It creates channels for dialogue and cooperation, but maintains the EU's level of requirements. In practice, these requirements remain one of the main factors limiting access for agricultural products to the European market. :: Who defines the sanitary rules for export? Each country or economic bloc defines its own sanitary rules, based on international standards of the World Trade Organization. In the European Union, sanitary and phytosanitary rules are defined centrally by the European Commission, through the Directorate-General for Health and Food Safety (DG SANTE). This body establishes general standards — such as hygiene requirements, residue limits, and audits — that all exporters, including Brazilians, must comply with. It works like this: DG SANTE is responsible for approving exporting countries and establishments (such as meat processing plants), based on audits and official lists. For exports from Brazil to the European Union, sanitary certificates are issued by Brazilian authorities, such as the Ministry of Agriculture (MPLSA). Phytosanitary certificates for products originating from the European Union are issued by the national authorities of each member country. For rural producers, it is important to: Verify if their establishment is authorized to export to the European Union in the official lists of MPLSA or DG SANTE. Prepare the documentation in advance, using the required certificate templates. To identify the competent authorities in the countries of the European Union, consult the attached document with the corresponding links. :: Who issues sanitary and phytosanitary certificates accepted by the EU in Brazil? In Brazil, sanitary and phytosanitary certificates accepted by the European Union are issued under the responsibility of the Ministry of Agriculture and Livestock. Vigiagro is the body responsible for issuing the final export certificate, based on analyses carried out by officially accredited laboratories. :: What is the concession rebalancing mechanism? It is an instrument created to deal with situations in which one of the parties adopts unilateral measures that, in practice, reduce the commercial benefits originally negotiated in the agreement. :: In what situations can this mechanism be activated? The mechanism can be used, for example, in cases of new environmental or regulatory requirements that hinder the access of Mercosur products to the European market. In these situations, there may be arbitration and, if necessary, trade compensation. :: What to do if a batch of a certain product is rejected by the European Union for environmental reasons? In these cases, it is possible to request an administrative review, present technical evidence of conformity, activate diplomatic channels and resort to the dispute settlement mechanisms provided for in the agreement itself and in the WTO. :: Why was the agreement divided into two instruments? The agreement was divided into two instruments called ITA and Empa. It was a legal and political strategy to allow the trade portion to come into effect more quickly, without having to wait for ratification by all national parliaments of the European Union countries. This division was fundamental to enabling the start of trade benefits, while preserving the broader political debate on the other aspects of the agreement. :: What is the difference between ITA and EMPA? The ITA (Interim Trade Agreement) is the interim trade agreement. It deals exclusively with trade issues, such as tariffs, quotas, market access, and investments. Because it only involves matters within the exclusive competence of the European Union, this agreement can come into effect after approval by the EU Council and the European Parliament. The EMPA (EU-Mercosur Partnership Agreement), on the other hand, is the complete partnership agreement. In addition to the trade portion, it involves political cooperation, environmental commitments, labor rights, and institutional dialogue. Because it includes areas of shared competence, the EMPA needs to be ratified by all national parliaments of the European Union, which tends to be a longer process. 

This text was translated by machine from Brazilian Portuguese.