Today, 13 November, the Estonian government decided to support the Council of the European Union’s decision to approve the signing of the EU-Mercosur Partnership Agreement and the accompanying interim Trade Agreement. Once in force, these agreements will establish the world’s largest free trade area.
Mercosur is the South American common market comprising Argentina, Brazil, Paraguay, and Uruguay. “The EU-Mercosur Partnership Agreement will create the world’s largest free trade area, home to more than 720 million people. Signing this agreement is a historic step that strengthens Estonia’s economic security and offers our businesses significantly improved access to the Latin American market,” said Foreign Minister Margus Tsahkna.
The reduction — and in many cases elimination — of tariffs on industrial goods will enhance the competitiveness of European products and is expected to save EU businesses over €4 billion annually. According to Tsahkna, this is a direct win for Estonia as well. “Our exports to Mercosur countries could grow by 7–8%, but even more importantly, the entire European economy will gain momentum. When our trading partners in Europe thrive, Estonia benefits too,” the minister noted.
For Estonia, the agreement is expected to boost exports in sectors such as machinery and electronics, mineral products, and medical and measuring instruments — all of which have previously faced tariffs of up to 20% in Mercosur countries. The agreement also liberalises the services market, allowing European companies to offer services directly without the need to establish subsidiaries or branches in Mercosur countries. In 2024, Estonia’s services exports to Mercosur totalled approximately €58.5 million, with telecommunications, transport, and tourism making up the largest share.
For the first time, Estonian companies will also be able to compete in Latin American public procurement markets, which have until now been closed. “The agreement also improves our access to critical raw materials essential for the production of high-tech goods,” Tsahkna added.
The trade agreement will also help Estonian agricultural products reach new markets by reducing current tariffs of 27–55%, which have effectively closed the Mercosur market to EU goods. “Some products will even benefit from zero tariffs, opening up new opportunities. In particular, the export potential of organic and innovative niche products will grow — areas where Estonian farmers can stand out thanks to their quality and clean production,” the minister said.
Tsahkna also highlighted the bilateral safeguard mechanisms included in the agreement for agricultural products. “These provide reassurance that if a sudden surge in imports threatens our farmers or market stability, the EU can respond swiftly by imposing temporary protective measures such as tariffs or import quotas. This balances the benefits and risks of the agreement and ensures that Estonian and European farmers are not left unprotected,” he affirmed.
The Partnership Agreement falls under shared competence between the EU and its member states and covers not only trade but also political cooperation across various fields. The interim Trade Agreement, under the EU’s exclusive competence, establishes a unified and modern framework for liberalising trade relations between the EU and Mercosur. Initially, the interim Trade Agreement will enter into force separately, but it will later be replaced by the Partnership Agreement once all parties have ratified it.
In 2024, the total volume of trade between the EU and Mercosur exceeded €111 billion, with exports accounting for €55.2 billion and imports €56 billion. Over 80% of trade flows were between the EU and Brazil.
More information and statistics: EU-Mercosur trade: facts and figures
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