Brazil Sees 13% Export Boost from EU-Mercosur Trade Deal

Deal to Drive 13% Export Growth by 2038

Brazil's government projects a 13% increase in the nation's total exports by 2038, driven by the full implementation of the free trade agreement between the European Union and the Mercosur bloc. Brazilian Vice President Geraldo Alckmin announced that industrial exports alone are forecast to rise by 26% over the same period.

Overview of the Trade Agreement

The trade deal, which tentatively comes into force on May 1, will see gradual tariff reductions completed within 12 years. According to Alckmin, approximately 5,000 products will have their import duties reduced to zero starting May 1, signaling an immediate impact. The Mercosur bloc includes Argentina, Brazil, Paraguay, and Uruguay. Last year, trade between Brazil and the EU, its second-largest partner after China, totaled about $100 billion.

Economic and Sector-Specific Impact

Key Brazilian sectors expected to benefit immediately include sugar, fruits, beef, and poultry. The agreement is designed to be balanced, with safeguards allowing both the EU and Mercosur to request temporary suspensions if a sudden surge in imports occurs. Brazilian imports are also anticipated to grow as a result of the deal, fostering broader economic exchange between the two regions.

Summary and Outlook

The EU-Mercosur agreement represents a significant long-term economic opportunity for Brazil, aiming to boost key export industries and strengthen trade ties. While the deal moves forward, Brazil is also pursuing progress on trade relations with the United States to broaden its international partnerships and address ongoing trade practice investigations.

FAQ

Q: What is the main projection for Brazil's exports under the EU-Mercosur deal?
A: Brazil's government expects a 13% increase in total exports and a 26% rise in industrial exports by 2038.

Q: When do the tariff cuts begin?
A: The gradual removal of tariffs begins immediately, with duties on nearly 5,000 products dropping to zero as of May 1.

Q: Which Brazilian sectors will be impacted first?
A: The sugar, fruits, beef, and poultry sectors are expected to see an immediate impact from the tariff reductions.

Source: Investing.com