EFTA-MERCOSUR ratification in Brazil: current status and outlook

EFTA-MERCOSUR Ratification in Brazil: Current Status and Prospects

Introduction: The Other Major Agreement Awaiting Its Moment

While all eyes are on the EU-MERCOSUR agreement and its recent application, another major trade pact, signed in August 2019, is patiently awaiting ratification: the free trade agreement between the European Free Trade Association (EFTA) and MERCOSUR. Comprising Switzerland, Norway, Iceland, and Liechtenstein, EFTA represents a sophisticated, high-value-added economy that is particularly complementary to that of MERCOSUR. However, nearly seven years after its conclusion, the agreement is still not in force, stuck in the maze of national ratification processes, particularly in Brazil. This article reviews the status of ratification in the Brazilian Congress, compares its journey to that of the EU agreement, and analyzes the implications for businesses in the EFTA countries, as well as the outlook for 2026-2027.

Understanding the fate of this agreement is essential. For MERCOSUR, it means privileged access to some of the world\'s richest markets. For EFTA, it is a strategic gateway to South America, ensuring it is not disadvantaged compared to its neighbor, the European Union. The current deadlock in Brazil is symptomatic of the internal political challenges that large trade agreements face, even when they have clear economic benefits.

The Long Road to Ratification in the Brazilian Congress

Signed on August 23, 2019, the EFTA-MERCOSUR agreement was hailed as a major milestone. It provides for the elimination or reduction of customs duties on approximately 95% of traded goods. The Brazilian government at the time quickly submitted the text to the National Congress in November 2019. And that\'s where the process slowed down.

The legislative path of an international treaty in Brazil is complex. It must first be analyzed by several committees in the Chamber of Deputies (Foreign Relations, Finance, Constitution and Justice) before being voted on in a plenary session. Once approved by the Chamber, it follows a similar path in the Federal Senate. In 2026, the agreement is still awaiting review by the key Foreign Relations and National Defense Committee (CREDN) of the Chamber.

Several factors explain this slowness:

* Political priority given to the EU-MERCOSUR agreement: Successive governments have focused their political and diplomatic efforts on the agreement with the EU, which is considered more strategic and has a much larger economic scope. * Opposition from certain industrial sectors: As with the EU agreement, some Brazilian sectors fear competition, particularly in the fields of chemicals and machinery, where Switzerland and Norway are very competitive. * Environmental concerns: Although less publicized than for the EU agreement, environmental issues, particularly deforestation in the Amazon, have been raised by Brazilian parliamentarians and NGOs, creating a climate unfavorable to rapid ratification. * Political instability: Changes in government and internal political crises in Brazil have relegated trade agreements to the background of the legislative agenda.

Comparison with the EU-MERCOSUR Agreement Timeline

The comparison of the two ratification processes is enlightening. The EU-MERCOSUR political agreement, reached in June 2019, has also had a difficult path. However, its size and symbolic importance have earned it constant political attention. Pressure from major European industrial groups and MERCOSUR\'s agricultural sectors has kept the agreement at the top of the agenda.

The agreement with EFTA, although substantial (trade between the two blocs amounted to about $7.4 billion in 2022), does not have the same critical mass. It is perceived as a "satellite" of the EU agreement. The strategy of many actors, both in Europe and in MERCOSUR, seems to have been to focus first on the "grand prize" (the EU agreement) before moving on to the second.

Implications for EFTA Businesses

For Swiss, Norwegian, Icelandic, and Liechtenstein businesses, this delay is a source of frustration and a competitive disadvantage. While their EU competitors are beginning to benefit from tariff reductions as of May 1, 2026, EFTA companies are still paying full duties.

* Pharmaceuticals and Chemicals (Switzerland): The Swiss chemical and pharmaceutical industry, a global heavyweight, is penalized. A Swiss drug exported to Brazil is still subject to a 10-14% duty, while its German competitor sees its tariff gradually reduced. * Fish (Norway and Iceland): Norwegian salmon and Icelandic cod face tariffs of up to 10% in MERCOSUR, which limits their competitiveness against other suppliers. * Machinery (Switzerland and Norway): The Swiss precision machinery industry and Norwegian offshore technology are held back in a market with enormous equipment potential.

Outlook for 2026-2027

However, there are reasons for moderate optimism. With the entry into force of the EU-MERCOSUR iTA, a new momentum is created. Brazilian sectors that benefit from access to the EU market now have an incentive to support trade liberalization in general. In addition, the diplomacy of the EFTA countries has intensified in Brasilia to try to unblock the situation.

The most likely scenario for 2026-2027 is as follows:

1. Progress in the Chamber of Deputies: The Brazilian government is expected to push for the agreement to be examined and voted on by the Chamber\'s committees in the second half of 2026.
2. Vote in the Senate: If the Chamber approves it, the text will go to the Senate, where the debate could be faster. Final ratification by Brazil could take place in mid-2027.
3. Ratification by the other members: Paraguay and Uruguay have already ratified the agreement. Argentina\'s ratification is pending, but it is expected to follow Brazil\'s lead.

Conclusion: An Agreement Too Important to Be Forgotten

The EFTA-MERCOSUR agreement is too strategically important to remain in limbo indefinitely. Although it has been overshadowed by its "big brother" from the EU, its economic benefits are undeniable for both sides. The main obstacle, political inertia in Brazil, seems to be giving way to the new trade reality created by the EU agreement. For EFTA businesses, patience is still required, but the horizon seems to be clearing. The entry into force, probably not before the end of 2027, will restore a level playing field with their European competitors and open a new promising chapter in relations between Europe and South America.