The trade agreement between the European Union (EU) and the Mercosur bloc, which includes Brazil, Argentina, Paraguay, and Uruguay, has been a central topic of discussion over the past few years. Signed in 2019, this free trade agreement aims to eliminate tariff barriers, foster trade exchanges, and establish new dynamics in the relationship between these two economic blocs. However, its implementation has generated a series of challenges, both in economic and operational terms, that must be understood by companies and professionals in international trade.
Brazil’s Customs Structure Under the EU-Mercosur Agreement
Brazil, as one of the most relevant members of Mercosur, plays a crucial role in the implementation of the agreement. Receita Federal do Brasil (RFB) is the authority responsible for customs control in the country. This entity not only supervises imports and exports but also regulates tariff classification, customs valuation, and the application of the corresponding taxes. The RFB operates under the Ministry of Economy and manages, through various systems and mechanisms, the monitoring of products crossing Brazilian borders.
What Does the EU-Mercosur Agreement Mean for European Companies?
1. Brazil Customs Control System and Radar Authorization
The most important system regulating foreign trade in Brazil is Radar, a digital authorization system to operate in international trade.
For a company to import or export products in Brazil, it must be registered in Radar, which requires formal authorization. This process, although streamlined, can be a challenge for European companies that do not have a subsidiary in Brazil, as it requires compliance with a series of fiscal and documentary requirements.
2. Tariffs and Trade Barriers Under the EU-Mercosur Agreement
One of the main benefits of the agreement is the elimination of tariffs on a wide range of products.
However, in Brazil’s case, some industrial sectors, such as automotive, still face tariff barriers.
For example, tariffs on automobiles and parts will be gradually eliminated over the next 18 years, allowing Brazil to adjust its automotive industry, particularly in regard to the production of electric vehicles. This gradual tariff elimination will extend to other industrial sectors, presenting a challenge for European exporters who must manage these transitional periods.
3. Impact on Agricultural Trade Between the EU and Brazil
Brazil, with its economy based on agricultural products, is one of the main beneficiaries of the agreement in terms of export. Products like soybeans, meat, sugar, and corn will benefit from the reduction or elimination of trade barriers. This agricultural specialization will be key for Brazil’s growth in trade with the EU but also represents a challenge for the country’s industrial sectors, which will need to adapt to international competition. For European companies, this could present both an opportunity to access agricultural products at more competitive prices and a challenge for local industries that will have to compete with Brazilian products.
4. Logistical and Operational Challenges in Brazil’s Customs System
Despite progress in the elimination of tariff barriers, Brazil’s customs system remains complex. Customs in Brazil, managed by the RFB, are responsible not only for fiscal and commercial aspects but also for the sanitary and phytosanitary monitoring of imported products. In this regard, European companies will need to ensure compliance with specific inspection requirements for agricultural products and other goods that may be subject to additional regulations, such as food or pharmaceutical products.
Incoterm and Customs Authorization in Brazil
Special Attention INCOTERMS:
It is not possible to use the DDP (Delivered Duty Paid) Incoterm for formal imports in Brazil. This is because only companies authorized to operate in Foreign Trade can perform imports and, therefore, pay the corresponding taxes. Brazilian law does not allow foreign companies to pay import taxes.
Companies engaged in international operations (import/export) must be registered in the “Habilitação Siscomex” system, the Authorization of Goods Declarants to operate in Foreign Trade, as defined in Instrução Normativa nº 1.984/20, which is the current legislation on the matter.
Link to Instrução Normativa nº 1.984/20 (Source: Receita Federal)
Instrução Normativa nº 1.984/20
The Authorization of Goods Declarants is an obligation that the importer/exporter must fulfill to carry out customs operations for international purchases/sales. According to Receita Federal, this process aims to improve customs controls and prevent fraudulent activity in foreign trade, making it difficult to identify the source of funds used in foreign trade operations and to correctly identify those responsible for violations of customs and fiscal legislation.
The Geopolitical and Economic Impacts of the Agreement
Beyond the technical aspects of customs, the agreement has a significant geopolitical dimension. In a global competitive context, the agreement seeks to strengthen the relationship between the EU and Latin America, opening new markets for European products, particularly in industrial sectors, while facilitating the export of Brazilian agricultural products.
Despite the economic benefits, the implementation of the agreement will not be immediate. Companies must prepare for a dynamic environment, where economic policy adjustments and the bilateral relations between the EU and Mercosur will continue to evolve. Additionally, Brazil’s growing alliance with China and the role of the RFB in regulating foreign trade mean that European companies will need to stay informed about Brazil’s commercial strategies and market dynamics.
Conclusion
The EU-Mercosur agreement represents a significant opportunity to strengthen trade ties between Europe and Latin America, but its success will depend on effective customs management in Brazil. European companies must familiarize themselves with Brazil’s customs system, understand the tariff restrictions that still exist, and adapt to the gradual transition of tariffs. Cooperation between customs authorities like Receita Federal do Brasil and companies will be crucial to make the most of the advantages this agreement offers, ensuring smoother and more efficient trade between the two blocs.
This agreement not only opens doors for trade but also presents challenges that companies must manage with knowledge and strategy, ensuring compliance with regulations and adapting to a new global commercial landscape.
Paralysis of the EU-Mercosur Agreement by the European Parliament
After more than 25 years of negotiations, the European Union and Mercosur (Argentina, Brazil, Paraguay, and Uruguay) had signed a free trade agreement on January 17, 2026, in Asunción (Paraguay) —the largest commercial agreement in the history of the EU by the population affected and volume of trade—with the purpose of gradually eliminating tariffs and opening markets for European industrial goods and South American agricultural products.
However, it is important to note that on January 21, 2026, the European Parliament decided to refer the text of the agreement to the Court of Justice of the European Union (CJEU) to evaluate its compatibility with EU treaties, which effectively suspends its approval and entry into force until the community justice system issues its ruling (which could take 18–24 months).
This decision does not reject the agreement definitively but paralyzes its parliamentary processing and ratification.
The formal motivation is a legal concern over the agreement’s legal basis and its compatibility with the regulatory autonomy of the EU, along with debates about the mechanisms for balancing the agreement.
The vote was tight, with 334 votes in favor of sending the text to the CJEU, 324 against, and 11 abstentions in the European Parliament.
What does this paralysis mean for Brazil and Mercosur?
The temporary suspension makes it difficult to apply the agreed tariff reductions, leaving the expected benefits for agricultural exports from countries like Brazil (soybeans, meat, sugar, corn) and the liberalization of European industrial products in legal and temporal uncertainty.
This situation adds to the debates about sectoral asymmetries between the EU and Mercosur countries, where Brazil tends to specialize in agriculture and the EU in manufacturing, intensifying the political and economic discussion in both blocs.
Although some actors within the EU, such as the European Commission, have expressed their intention to implement the agreement provisionally after partial ratifications and before the CJEU issues its opinion, this has not yet materialized formally.
The EU-India Trade Agreement: “Mother of All Deals”
As a final touch, we must include the EU-India Trade Agreement, which Ursula von der Leyen defined with the expression: “We did it, we delivered the mother of all deals”. This agreement, which has been worked on in parallel with the Mercosur situation, was concluded on Tuesday, January 27, 2026, between the European Union and the Republic of India.
We could say that this January of 2026 has been a full month of novelties in international trade.
This blog post has been written by Albert Garcia Trius, International Development Advisor for MBE Airport Group
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