Two Blocks Are Expected to Start Negotiating Mercosur-EFTA Free Trade Agreement

In the attempt of expanding their markets, the Mercosur states are expected to launch negotiations on a free trade agreement with the European Free Trade Association (EFTA), a bloc formed by four European countries – Switzerland, Norway, Iceland, and Liechtenstein. The announcement should be made in Davos, Switzerland, on January 19, 2017, in parallel to the World Economic Forum 2017, in a ceremony attended by senior officials from both sides.

Although the EFTA countries are not a part of the European Union, they participate in the European Union’s single market, and, due to their high purchasing power, they already represent 11th largest market for Brazilian exports. In 2016 only, Brazil sold US$ 2.4 billion worth of goods to the EFTA bloc.

The agreement should bring many benefits to the agribusiness and the industrial sector, enhancing the trade of products such as beef, poultry, orange juice, pulp and paper, wood products, airplanes, chemicals and compressors.

There is no the deadline for conclusion of the negotiations on the Treaty, but the first meeting between the two blocks is due to take place in February 2017. The discussions should include negotiations on tariffs applied on industrial and agricultural goods and services, government procurement, intellectual properties and technical barriers.

According to Undersecretary General for Economic and Financial Affairs of the Brazilian Ministry of Foreign Affairs (Itamaraty), Ambassador Carlos Márcio Cozendey, the negotiations may have the same profile as the negotiations with the EU, but could go on faster, as Mercosur will negotiate with only four countries, as opposed to 28. Ambassador Cozendey also affirmed that EFTA countries tend to resist opening their markets for Mercosur agricultural products, and highlighted sensitivities in industrial sectors, such as capital goods and medicines. On the other hand, Brazilian entrepreneurs are worried about liberalization in segments such as steel, fertilizers, plastics and electronics, and concerns have been expressed about the Agreement allowing the Swiss to win many bids on the supply of medicines opened by the Brazilian Ministry of Health .

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