The imminent signing of the trade agreement between the European Union and Mercosur, scheduled for January 17th after receiving the Council’s green light, will leave a clear winner on the other side of the Atlantic. Brazil will, by a wide margin, be the main economic beneficiary of the deal, thanks to its productive capacity in agriculture, livestock, and raw materials—far greater than that of any EU member state.
While senior EU officials seek to reassure critical MEPs by insisting that Parliament will retain its ratification powers and that there will be no automatic provisional application of the agreement, the available economic studies point to a clear conclusion: The treaty entrenches a structural asymmetry between a Mercosur that is highly competitive in primary production and a European Union increasingly constrained by regulatory, climate-related, and political costs in its agri-food sector.
According to a study carried out by the Institute for Applied Economic Research (Ipea), a public body of the Brazilian government, Brazil could increase its gross domestic product by 0.46% by 2040 as a direct result of the agreement, equivalent to around $9.3 billion. This represents the largest positive impact among all the signatories and more than double the growth projected for Argentina, Uruguay, and Paraguay, whose GDP increase is estimated at around 0.20%.
The explanation for this gap is not cyclical but structural. Brazil is the largest economy in Mercosur and one of the world’s leading producers and exporters of food. Beef, poultry, pork, soybeans, vegetable oils, sugar, coffee, and mineral products make up an export basket that aligns perfectly with the tariff concessions envisaged in the agreement and with the structural demand of the European market.
The trade context further reinforces this trend. In 2023, the European Union consolidated its position as Brazil’s second-largest trading partner, behind only China, with bilateral trade of approximately $101 billion. Brazilian exports to the EU reached $49.81 billion, with a growing share accounted for by the agri-food sector—precisely the most politically sensitive area in several member states.
The Ipea study itself anticipates that Mercosur’s agri-food sector will be the main beneficiary of the agreement, even taking into account the safeguards, quotas, and protective mechanisms later introduced by the European Commission to contain internal opposition from European farmers. For Brazil, the cumulative impact up to 2040 would allow for additional growth of close to 2% in agriculture, alongside more moderate increases in services, mining, and industry. In return, some specific industrial segments, such as machinery or electrical equipment, would lose competitiveness to European producers—a manageable cost for an economy whose export core remains primary production.
The agreement also significantly strengthens Brazil’s position as a destination for foreign direct investment. Ipea estimates that investment could increase by1.49 %, compared with a much more limited impact within the EU. This is no minor detail, given that the European Union already accounts for nearly half of all accumulated foreign investment in South America—a position that the treaty both consolidates and expands.
From a European perspective, the benefits of the agreement are unevenly distributed. Germany appears as one of the main potential beneficiaries due to the opening of the South American market to its automotive, chemical, and machinery industries. Spain is also among the best-positioned countries, given the presence of large companies in Brazil and the opportunities in services, energy, and infrastructure. The Netherlands, Italy, and Portugal complete the group of member states with the greatest capacity to capitalise on the deal, whether as logistics hubs, industrial exporters, or historical partners of the Brazilian market.
On the opposite side are countries with a strong agricultural and livestock base, such as France, Ireland, Belgium, and Poland, where fears of competition that is difficult to match in terms of costs and scale have fuelled persistent political opposition. It is precisely in this context that the European Commission has stepped up its efforts to ease tensions with Parliament.
The Commission’s Director-General for Trade, Sabine Weyand, has informed MEPs that provisional application of the agreement will not be automatic after signing and that Mercosur countries will first need to complete their own ratification and notification procedures. Brussels insists there is no intention to bypass parliamentary scrutiny, even though the EU’s legal framework allows for partial application before the European Parliament’s final vote.
