The Mercosur and European Free Trade Association logos are shown ahead of the implementation of the trade agreement between the two blocs. Photo: EFTA

NNA News - Brazil has completed the domestic legal process for the Mercosur-European Free Trade Association free trade agreement, with preferential trade arrangements beginning with Iceland in October and Norway in November.

President Luiz Inácio Lula da Silva promulgated the agreement through Decree No. 13,126, published in an extra edition of Brazil’s Official Gazette on Wednesday. The decree confirms that Brazil deposited its instrument of ratification with Norway in July and that the agreement enters into force for Brazil in October. The agreement covers Mercosur members Argentina, Brazil, Paraguay and Uruguay and the four EFTA states, Iceland, Liechtenstein, Norway and Switzerland. For Switzerland and Liechtenstein, the start of preferential tariff treatment remains dependent on completion of their respective domestic procedures.

Brazil’s Minister of Development, Industry, Foreign Trade and Services, Márcio Elias Rosa, described the agreement as “another step in the strategy of trade diversification and Brazil’s integration into the international economy”. The agreement provides new market access conditions for Brazilian products through tariff reductions and elimination, quotas and other preferential arrangements. EFTA countries will eliminate tariffs on industrial and fishery products when the agreement takes effect, while agricultural products will be subject to different market-opening arrangements.

The pact also establishes rules covering trade facilitation, rules of origin, services, investment, government procurement, intellectual property and sustainable development. EFTA separately describes the agreement as a comprehensive pact covering trade in goods and services, investment and other regulatory areas. Foreign Trade Secretary Tatiana Prazeres said Brazil’s immediate objective was to “identify where the opportunities are” and prepare businesses to use the new rules.

The Brazilian ministry has launched a data panel showing tariffs, trade flows and the treatment provided for different products under the agreement. The ministry said Switzerland and Norway together account for 94 percent of Brazilian exports to EFTA and 99 percent of Brazilian imports from the association. The ministry cited agricultural products as an area where the agreement could create new market opportunities. Roasted coffee, for example, currently faces tariffs of 10 percent in Iceland and 7 percent in Switzerland and Liechtenstein for relevant product codes, with reductions planned for most of those codes.

Prazeres said the government was working to “transform the negotiated content into practical information”, including through manuals covering tariff reductions, rules of origin and geographical indications. The agreement was signed in Rio de Janeiro in September last year after negotiations that began in 2017. EFTA records show that the negotiations involved 14 rounds, correcting the 10 rounds cited in the supplied report. The agreement is designed to create a free-trade zone covering almost 300 million people, with a combined GDP of more than US$4.3 trillion.

Implementation is taking place bilaterally as individual countries complete their domestic procedures. For Brazil, the first preferential arrangements will therefore apply with Iceland from October and with Norway in November.