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LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

July 21, 2025

How Will the Mercorsur-EFTA Deal Affect Trade?

South America’s Mercosur trade bloc, whose headquarters in Montevideo are pictured, this month finalized a trade deal with the European Free Trade Association. // File Photo: Dantok via Adobe Stock.

Q

  • South American trade bloc Mercosur earlier this month finalized a free trade agreement (FTA) with the European Free Trade Association (EFTA), the non-E.U. group of Norway, Switzerland, Iceland and Liechtenstein. About 97 percent of trade goods between the blocs will be covered under the agreement, which was signed amid the separate ongoing approval process of Mercosur’s FTA with the European Union. To what extent could Mercosur’s FTA with the EFTA affect key sectors for economies in South America, such as agriculture and mining? What is the significance of the Mercosur-EFTA agreement in the present geopolitical context? How might Mercosur’s new agreement with the EFTA affect the likelihood of the completion of the FTA with the European Union?

A

Regiane Nitsch Bressan, associate professor of international relations at the Federal University of São Paulo: “I am optimistic about the free trade agreement between Mercosur and the European Free Trade Association. This agreement comes at a promising time for Mercosur, as the bloc has been actively seeking to establish agreements with third parties, whether individual countries or other blocs. Regarding key sectors of the South American economy, such as agriculture and mining, the Mercosur-EFTA acts as a catalyst for growth. For agriculture, the elimination of tariff and non-tariff barriers can boost exports of commodities and processed goods, expanding value addition capacity and diversifying production chains. In the mining sector, the agreement can attract investments and technology, improving…”

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The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe, click here. For terms and conditions, click here. For more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.
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