After more than 25 years of negotiations, European Union member states have given preliminary approval to the EU–Mercosur trade agreement, clearing the way for what could become one of the largest free trade areas in the world. The decision, taken by the EU’s Committee of Permanent Representatives, authorises the formal signing process, although the agreement will still require ratification by the European Parliament and Mercosur countries before entering into force.
European Commission President Ursula von der Leyen is expected to attend a symbolic signing ceremony in Paraguay in the coming days, underscoring the political momentum behind the deal. However, the legislative phase ahead is likely to be closely contested, particularly in Europe, where concerns around agriculture and environmental standards persist.
Beyond tariffs and market access, the agreement reflects a broader geopolitical recalibration. Rising global trade tensions and Europe’s determination to reduce its dependence on China for strategic raw materials have elevated critical minerals to a central role in EU trade and industrial policy.
European officials have made clear that securing reliable access to critical minerals is now a strategic priority. Materials such as lithium, nickel, copper, graphite, niobium and rare earth elements are essential for the energy transition, electrification, defence technologies and advanced manufacturing.
According to EU negotiators, the Mercosur region (particularly Brazil) offers a combination of geological potential, scale and political stability that aligns with Europe’s objectives for supply chain diversification. The issue of critical minerals was largely absent when negotiations began two decades ago, but it has since become one of the defining factors behind the agreement’s conclusion.
Ana Paula Repezza, Director of Business at ApexBrasil, noted that critical minerals were among the themes that ultimately unlocked progress in the talks. What was once a marginal issue has become a cornerstone of the agreement’s strategic relevance.
Under the terms of the agreement, the EU will progressively eliminate import tariffs on a wide range of minerals and mineral compounds exported from Mercosur countries. In many cases, tariff reductions will occur within four to five years of the agreement’s entry into force, with some products benefiting from immediate duty-free access.
While key commodities such as iron ore already entered the EU tariff-free prior to the deal, the new framework significantly improves access for processed and semi-processed mineral products. This shift is particularly relevant for critical minerals used in batteries, renewable energy systems and advanced technologies.
At the same time, the agreement reduces tariffs on advanced mining machinery and equipment imported into Mercosur. This is expected to lower costs for Brazilian mining operations and facilitate access to high-end European technologies, especially from industrial hubs such as Germany and Sweden.
Importantly, the revised agreement preserves Brazil’s ability to pursue industrial policies aimed at increasing domestic value addition. Unlike earlier versions of the deal, the current text allows Brazil to introduce export restrictions or taxes on critical minerals if deemed necessary to support local processing and downstream development.
Any such measures applied to exports destined for the EU would be capped and structured to remain lower than those imposed on other markets. This flexibility reflects Brazil’s broader ambition to move beyond raw material exports and capture greater economic value through refining, processing and manufacturing.
The agreement also aligns with Europe’s evolving regulatory framework for raw materials, including the EU’s Critical Raw Materials Act. Brazilian exporters will face higher expectations around traceability, environmental performance and supply chain transparency.
While these requirements raise compliance costs, they also create incentives for investment in more sustainable mining practices and certification systems, areas where European partners are actively seeking long-term collaboration.
If ratified, the EU–Mercosur agreement is expected to strengthen legal certainty and improve the investment climate for European companies operating in Brazil. The treaty guarantees non-discriminatory treatment and the right of establishment, allowing EU firms to invest in mining, processing and industrial projects without additional barriers.
For Brazil, the agreement represents an opportunity to position itself as a strategic supplier of critical minerals at a time when global competition for these resources is intensifying. The challenge now lies in translating preferential market access into long-term investment across the full value chain.
As the agreement advances through the ratification process, attention will turn to how quickly regulatory clarity, sustainability standards and industrial policy alignment can convert geopolitical interest into tangible projects on the ground.
