Mercosur-EU Deal Boosts Small Businesses
Mercosur-EU Trade Agreement Opens International Markets for Small Businesses
After 25 years of negotiations, Mercosur and the European Union signed a free trade agreement on December 6, 2024, in Uruguay. This is the largest trade agreement in the world, involving 32 countries and 780 million people. For small businesses in Brazil, this agreement offers a significant opportunity to expand into international markets. The Mercosur-EU Deal Boosts Small Businesses, opening new doors for growth and global exposure.
The agreement aims to reduce or eliminate import and export tariffs between the two blocs. It is expected to add R$ 1.8 billion to Brazil’s trade balance. In addition to accessing the European market, small Brazilian businesses will also attract increased foreign investment to the country.
Trade between Brazil and the European Union is forecasted to grow by R$ 94.2 billion, or approximately 5.1 percent of current trade exchanges. Economists estimate that the impact on Brazilian GDP will reach R$ 37 billion, or about 0.34 percent of the national economy.
Since the tariff reductions will happen gradually, the full impact of the agreement will only be felt by 2044. The tariff cuts should boost imports from the EU to Brazil by R$ 42.1 billion, while Brazilian exports to the European Union could rise by R$ 52.1 billion. The Mercosur-EU Deal Boosts Small Businesses, giving Brazilian companies a stronger competitive edge in global markets.
Opportunities for Small Businesses
Currently, 19% of the total exports from Brazilian small businesses go to the European Union. Sectors such as food and beverages, fashion, furniture, and equipment are in high demand. Additionally, Brazilian startups have a significant opportunity to meet the growing technology needs of the European market.
Sebrae has actively promoted small businesses to the European market in collaboration with other organizations. For example, Sebrae participated in the Web Summit in Lisbon alongside Apex Brazil. The Casa Brasil in Lisbon will serve as a support hub, assisting businesses in their international expansion.
Furthermore, Sebrae offers training and support to help companies prepare for export. These initiatives help businesses adjust their products and become more competitive in the European market. According to the Institute for Applied Economic Research (Ipea), the agreement could increase Brazil’s GDP by 0.46% by 2040 and raise foreign investments by up to 1.49%.
A 25-Year Journey
Mercosur and the European Union began negotiations in 1999, but they reached an initial agreement in 2019. Later, the European Union made revisions to the text, primarily due to concerns about competition from South American agricultural products in European markets.
The agreement also includes provisions for political and environmental cooperation, government procurement, and intellectual property protection. However, the parliaments of the Mercosur countries and the European Council and Parliament still need to approve the final text.
Text adapted by: Rhennan Caldeira
