Mercosur Reaches Free Trade Agreement with EFTA

Mercosur announced yesterday the conclusion of a free trade agreement with EFTA — the bloc formed by Iceland, Liechtenstein, Norway, and Switzerland. This is Mercosur’s second trade deal since December of last year. The earlier agreement with the European Union reportedly gave political momentum to negotiations with EFTA.

The announcement was made during the 66th summit of the South American bloc, held in Buenos Aires. Valor Econômico had previously reported that a deal with the four European countries was expected by July.

According to Brazil’s Ministry of Foreign Affairs (Itamaraty), the agreement will ease trade for about 97% of products currently exported between the two blocs. “Both parties will benefit from improved market access for over 97% of their exports, which will boost bilateral trade and benefit companies and citizens,” the Ministry said in a press release.

In practice, the deal will establish a free trade zone encompassing nearly 300 million people and a combined Gross Domestic Product (GDP) of over US$ 4.3 trillion. However, the implementation of the free trade zone still depends on a national referendum in Switzerland — a unique aspect of the country’s legislative process.

Brazil’s Ministry of Development, Industry, Trade and Services (MDIC) also issued a statement noting that, with the conclusion of this and the EU agreements, along with the 2023 deal signed with Singapore, the share of Brazilian trade covered by free trade agreements will increase by 1.5 times — from US$ 73.1 billion to US$ 184.5 billion.

“These negotiations are part of Brazil’s broader strategy to diversify trade partnerships. It’s a comprehensive agreement covering goods, services, investment, intellectual property, and sustainability. It will bring more predictability and legal certainty to our trade,” explained Vice President and MDIC Minister Geraldo Alckmin, who is attending the summit in Argentina.

Ongoing Challenges
While the full terms of the agreement have not yet been disclosed, Valor has learned that Brazil resisted pressure from Switzerland to include additional clauses on intellectual property. The Swiss demands stemmed from concerns within their pharmaceutical industry over the potential for compulsory patent licensing by South American countries.

Another sticking point in the negotiations was the so-called “rules of origin” — a set of criteria that determine whether a product can be considered to have originated from a particular region. This issue is especially sensitive for EFTA, whose members often have parts of their production processes in neighboring countries, which could complicate origin classification.

According to the National Confederation of Industry (CNI), the agreement creates 724 new trade opportunities for Brazil, covering 495 products. The CNI noted that each chance is counted by product and by country — meaning a single product may have multiple export possibilities across the four EFTA nations.

Source: Valor Econômico

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