Trade Agreement
EU-Mercosur Trade Agreement
Tariff phase-outs, government procurement access, rules of origin — what European exporters need to know.
After over 25 years of negotiations, the EU-Mercosur trade agreement entered provisional application on May 1, 2026. It creates a combined market of over 700 million people and will eliminate tariffs on 91% of EU goods exported to Mercosur over the next 10-15 years.
This guide focuses on the practical impact for companies exporting goods to Brazil specifically — the largest Mercosur economy and the destination that matters most for your landed cost calculations.
The numbers that matter
Tariff elimination schedule
Not all tariffs disappear on day one. The agreement groups products into baskets with different phase-out timelines:
| Basket | Timeline | What's in it |
|---|---|---|
| Immediate | Day 1 (May 2026) | Products already at 0%, some raw materials and industrial inputs |
| 4 years | By 2030 | Most industrial raw materials, chemicals, some machinery components |
| 7 years | By 2033 | Majority of industrial goods, tools, instruments, processed metals |
| 10 years | By 2036 | Machinery, equipment, consumer electronics, most manufactured goods |
| 12-15 years | By 2038-2041 | Sensitive goods: vehicles, textiles, footwear, some food products |
| TRQ | Varies | Tariff-rate quotas for beef, dairy, sugar, ethanol, wine |
Key sectors for EU exporters
Machinery and equipment (HS 84-85)
The biggest win. 93% of EU machinery exports will have tariffs eliminated within 10 years. Current tariffs of 14-18% will gradually drop to zero. This applies to CNC machines, industrial robots, turbines, generators, compressors, and packaging equipment.
Pro tip: For capital goods, Ex-Tarifário already provides 0% duty on many products — use it now rather than waiting 10 years for the FTA phase-in.
Vehicles and automotive parts (HS 87)
The most sensitive category. Vehicles face 35% tariffs — the highest in Brazil's tariff schedule. The phase-out is 15 years with a TRQ of 50,000 units during the transition. Auto parts see faster reduction (7-10 years).
Chemicals and pharmaceuticals (HS 28-30)
Industrial chemicals are mostly liberalized within 7 years. Pharmaceuticals over 10 years. The agreement includes provisions for mutual recognition of Good Manufacturing Practices (GMP), which can shorten the ANVISA registration process.
Wine and spirits (HS 22)
EU wine gets a TRQ of 75,000 hectoliters at reduced rates. Spirits see gradual tariff reduction over 10-12 years. The agreement also protects 355 EU geographic indications (Champagne, Scotch, Parmigiano-Reggiano, etc.).
Textiles and footwear (HS 50-64)
The slowest phase-out: 12-15 years. Brazil protects its textile and footwear industries heavily. Current tariffs of 20-35% make these categories only viable for premium and luxury segments.
Rules of origin
To qualify for preferential tariffs, your product must meet the EU-Mercosur rules of origin. Key requirements:
- Wholly obtained — agricultural products grown/harvested in the EU, minerals extracted in the EU, goods manufactured entirely from EU materials
- Sufficient processing — for products using non-EU inputs, they must undergo substantial transformation in the EU. The specific rule varies by product (change of tariff heading, value-added threshold, or specific manufacturing process)
- Cumulation — materials from the other party (Mercosur) can count toward meeting origin requirements
- De minimis — up to 10% of the ex-works price can be non-originating materials without affecting origin status
You'll need a Certificate of Origin — either a formal certificate from your country's chamber of commerce, or an origin declaration on the commercial invoice for authorized exporters.
Public procurement access
One of the most significant non-tariff provisions: EU companies can now bid on Brazilian federal government procurement contracts above certain thresholds. This opens a market worth billions annually in infrastructure, IT, and equipment purchases.
Key thresholds for EU bidders:
- Goods and services: SDR 130,000 (~EUR 160,000) for central government
- Construction: SDR 5,000,000 (~EUR 6,150,000)
- Sub-central entities: Higher thresholds, to be defined during implementation
?What is an NCM code?
NCM (Nomenclatura Comum do Mercosul) is Brazil's 8-digit tariff classification code. The first 6 digits match the international HS (Harmonized System) code — the remaining 2 are Mercosur-specific. Every import tax rate in Brazil is determined by the NCM code.
HS → NCM lookup tool?What is Ex-Tarifário?
Ex-Tarifário is a Brazilian government program that temporarily reduces import duty (II) to 0–2% for capital goods (BK) and IT/telecom equipment (BIT) that have no domestic equivalent. Applications are analyzed by SDIC and resolutions published by GECEX.
Check Ex-Tarifário eligibility?What is ICMS?
ICMS (Imposto sobre Circulação de Mercadorias e Serviços) is a state-level VAT charged on imported goods. Rates vary by state (typically 17–20%, up to 25% for some products). ICMS cascades on top of other import taxes, significantly increasing landed cost.
ICMS rates by stateEU-Mercosur vs. Ex-Tarifário: which to use?
These are complementary mechanisms, not competitors. Here's when to use each:
| Scenario | Best option | Why |
|---|---|---|
| Capital goods with no domestic equivalent | Ex-Tarifário | Immediate 0% vs. waiting 10 years for FTA phase-in |
| Consumer goods from EU | EU-Mercosur | Ex-Tarifário doesn't cover consumer products |
| EU machinery WITH domestic equivalent | EU-Mercosur | Ex-Tarifário denied when domestic equivalent exists |
| Non-EU capital goods (US, Japan, Korea) | Ex-Tarifário | EU-Mercosur only benefits EU-origin products |
| EU goods during transition (2026-2036) | Both — compare | Ex-Tarifário may give 0% while FTA only gives partial reduction |
Important limitations
- Provisional application means provisional. The agreement is applied provisionally while EU member states ratify. Technically, ratification could fail, though this is considered unlikely.
- Phase-in is gradual. For most industrial goods, you won't see zero tariffs until 2033-2036. During the transition, Ex-Tarifário is often the faster route.
- Rules of origin add compliance cost. You need documentation proving EU origin. For products with complex supply chains, this may not be straightforward.
- Other taxes are unaffected. The agreement only reduces import duty (II). IPI, PIS, COFINS, ICMS, AFRMM, and Siscomex fee remain unchanged. For many products, II is only 20-30% of total import taxes.
- Anti-dumping remains independent. Brazil can still impose anti-dumping duties on EU goods regardless of the agreement.
Practical next steps
- Find your product's NCM code — Use our HS → NCM lookup →
- Check the current tariff rate — this is your baseline before FTA reduction
- Check Ex-Tarifário status — Search the database → (may already be 0%)
- Calculate landed cost with current rates — Use our calculator →
- Prepare your Certificate of Origin — contact your chamber of commerce for the EU-Mercosur origin certificate process
The EU-Mercosur agreement is the beginning of a structural shift in Brazil-EU trade. For European exporters, it creates a compounding advantage: lower tariffs each year, protected geographic indications, and public procurement access that your non-EU competitors don't have.