NextFin News - Brazilian President Luiz Inácio Lula da Silva signed a decree on Tuesday, April 28, 2026, to officially enact the long-awaited trade agreement between Mercosur and the European Union. The treaty, which has been under negotiation for 27 years, is set to take effect provisionally in Brazil on May 1st. This move marks the conclusion of Brazil's internal legal procedures and signals a strategic pivot toward European markets as global trade tensions continue to reshape South American alliances.
The agreement establishes one of the world’s largest free trade zones, encompassing a combined market of 720 million people and a total GDP exceeding $20 trillion. Under the terms of the deal, tariffs will be eliminated on 90% of traded goods over a 14-year implementation period. For Brazil, the immediate impact will be felt in the agricultural sector, with preferential access granted for sugar, beef, poultry, and fruit exports. Conversely, the agreement will eventually remove duties on 76% of European industrial imports, a provision that has sparked debate within Brazil’s domestic manufacturing circles.
During the signing ceremony in Brasília, President Lula characterized the agreement as a victory for multilateralism, explicitly referencing the protectionist shift in Washington. He noted that Brazil sought new partners rather than "crying over spilled milk" following the trade restrictions imposed by U.S. President Trump last year. The Brazilian government, led by Vice President and Trade Minister Geraldo Alckmin, projects that the deal could boost national exports by 13% by 2038, with industrial exports potentially rising by 26% over the same period.
However, these optimistic projections are met with caution by some regional analysts. Aluisio de Lima-Campos, a veteran trade specialist and chairman of the ABCI Institute, has historically maintained a skeptical stance toward the lopsided nature of North-South trade deals. Lima-Campos argues that while the agreement provides a windfall for Brazil’s agribusiness, it risks "de-industrializing" the Southern Cone by exposing nascent manufacturing sectors to sophisticated European competition before they are ready. His view, while influential among trade skeptics, does not represent the current consensus of the Brazilian executive branch or the major industrial federations, which have largely pivoted to support the deal as a necessary step for global integration.
The timing of the enactment is also influenced by the broader commodity landscape. As of today, Brent crude oil is trading at $103.75 per barrel, while spot gold (XAU/USD) stands at $4,607.365 per ounce. These elevated commodity prices provide a temporary cushion for Brazil’s trade balance, but they also underscore the economy's continued reliance on raw material exports—a structural dependency that critics like Lima-Campos fear the EU agreement might solidify rather than solve.
Implementation remains subject to significant hurdles across the Atlantic. While the European Commission and Council Presidents António Costa and Ursula von der Leyen signed the partnership in January, the European Parliament and individual member states like France continue to harbor deep reservations. French Agriculture Minister Annie Genevard recently warned that Paris might adopt unilateral measures to protect its farmers from a surge in South American beef imports. In Brazil, the decree allows for provisional application, but the full weight of the treaty will only be felt once all Mercosur members—including Argentina, Paraguay, and Uruguay—complete their respective ratifications.
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