Mercosur-EU trade deal raises cautious dairy outlook
Limited quotas to shield sector as ratification pending
25 February 2026
1 minute read
By: The Mercosur-European Union trade agreement approved in January 2026 has raised expectations for closer bilateral trade, although it still requires ratification by member countries, according to Embrapa.
If implemented, the agreement would gradually eliminate tariffs on more than 90 per cent of traded products. In dairy, exemption quotas for milk powder and cheese are considered modest relative to the size of the two markets. Mozzarella cheese was excluded from the agreement and remains subject to tariffs. Butter is expected to see an immediate tariff reduction of 30 per cent.
Researchers said the main impact could be felt in higher value cheese segments, where European products may gain greater access to the Brazilian market.
Glauco Carvalho of Embrapa said the agreement presents longer-term opportunities for Brazil. “Europe works as a certification for Brazil. If we improve our health and quality issues to meet European standards, this accredits us globally, opening doors to other markets,” he said.
The European Parliament recently referred the agreement to the Court of Justice of the European Union to confirm compliance with bloc laws. The review process could delay full implementation for more than a year. The European Commission, however, may apply parts of the agreement provisionally while the review is underway.
