After more than two decades of negotiations, the agreement between Mercosur and the European Union has gone from being a promise to a practical reality: on May 1, 2026, the Interim Trade Agreement (ITA) entered into provisional force.
For foreign companies that had already been eyeing South America, the question is no longer “Will the agreement ever get off the ground?” but rather “What’s already in effect, what’s still pending, and why Brazil remains the most logical starting point for entering the region?”.
Not everything took effect at the same time
A little-discussed detail is that the agreement was divided into two parts with different timelines. The Interim Trade Agreement, which addresses market access and tariff reductions, took effect in May because it depended only on ratification by the Mercosur countries and approval by the European Union as a bloc.
The EU-Mercosur Partnership Agreement (EMPA), on the other hand, which covers political cooperation and environmental governance, requires individual ratification by each of the 27 European Union countries, including some that have expressed resistance, such as France, Poland, and Ireland.
In practice, this means that the aspect of greatest interest to those considering doing business in the region, the elimination of tariffs on thousands of products, is already underway, even as the institutional framework of the agreement continues to take shape over the coming years.
Why does Brazil remain the most logical point of entry?
Mercosur operates under a Common External Tariff (CET), which allows the bloc to negotiate with the rest of the world as a single entity. This has a direct implication for foreign companies: establishing operations in one of the bloc’s four countries facilitates access to the other three, and agreements reached by the bloc tend to benefit those already operating within it.
Brazil is home to the group’s largest economy and largest domestic market, which naturally attracts a significant number of multinationals that already use the country as a regional hub, a sort of “social proof” for those still deciding where to establish their first South American operation.
What’s really new compared to a few months ago
While the agreement with the EU was moving forward, Brazil also continued to negotiate in parallel. The country has made progress on additional trade agreements with Singapore and the countries of the European Free Trade Association (EFTA), as part of a broader strategy to diversify its trading partners. This reinforces a point that is only becoming clearer now: Brazil’s trade liberalization does not depend on a single agreement; it is an ongoing trend, with the Mercosur-EU agreement being its most recent and visible chapter.
On the legal side, it is also worth noting that the European Parliament has requested an opinion from the Court of Justice of the European Union on the agreement’s compatibility with European treaties, a process that could take up to two years but does not interrupt the trade provisions already in effect. For those considering entering the market now, this means operating under rules that are already in force, even though some institutional details remain unresolved.
What does this mean in practice for those deciding to enter the market now?
Establishing a business in Brazil is not just a decision about where to be physically located, but about how to access an entire regional market. With the trade portion of the Mercosur-EU agreement already in effect, entering the market through Brazil now means operating at a time when the region’s trade integration is no longer a prospect but has become a reality.
A Pryor Global se preocupa com o uso de seus dados pessoais. Solicitamos apenas os dados necessários para podermos retornar seu contato. Estes dados serão devidamente protegidos. Para mais informações, consulte nossa Privacy Policy".