The European Free Trade Association (EFTA) States – Iceland, Liechtenstein, Norway, and Switzerland – and the Common Market of the South (Mercosur) – Argentina, Brazil, Paraguay, and Uruguay – signed a free trade agreement (FTA) on the 16th of September in Rio de Janeiro.
The two blocs boast a combined population of around 290 million and a GDP of more than US$4.39 trillion. Although the numbers alone justify applauding the FTA, the two sides also celebrated its conclusion amid increased protectionism and unilateralism, hailing it as signal in favour of international trade. The agreement follows the conclusion of other free trade agreements by the South American bloc with the European union (December 2024) and Singapore (December 2023).
Beyond the liberalisation of trade flows, the FTA also introduces significant regulatory implications. The chapters on Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary Measures (SPS) aim to enhance regulatory transparency, foster cooperation between competent authorities, and promote alignment with international standards. These mechanisms will reduce compliance costs for companies operating in highly regulated industries—such as pharmaceuticals, chemicals, food, and medical devices—by streamlining conformity assessment procedures and facilitating mutual recognition of certifications.
Under the agreement, the EFTA States will eliminate 100% of tariffs within the fishing and industrial sectors. Almost 100% of the Brazilian exports to EFTA countries will be benefitted. Brazil will in turn liberalise 97% of its trade, which concentrate in the pharmaceutical and chemical sectors as well as machines and equipment. Companies will also benefit from commitments towards trade facilitation, which include process simplification regarding imports, export and transit of goods. All that is likely to intensify IP-rich trade flows mainly from the EFTA States, making IP protection in Mercosur even more strategic.
The agreement additionally includes provisions on the use of inputs originating from the European Union with the goal of adding value to goods produced in both blocs, as well as promoting integration in global supply chains. To benefit from integration, companies may need to adjust their IP licenses to prevent blocking downstream manufacturing and re-export. Also, planning how trade secrets and know-how will be shared is crucial, as more diverse business practices will have different standards for protecting IP. Finally, companies will select partners where IP enforcement can be relied on.
The regulatory dimension of the FTA further strengthens these outcomes. The provisions on conformity assessment and standard-setting are expected to enhance predictability for businesses, particularly in the pharmaceutical, biotech, and agri-food sectors, where complex and divergent regulatory regimes often delay market access. By committing to transparency, early notification of new regulations, and dialogue among authorities, both blocs lay the groundwork for long-term regulatory convergence.
As to services, the agreement established commitments regarding market access, including in specific sectors such as telecommunications and financial services, with the acceptance of the principle of national treatment by both sides. The latter is an important industry for Swiss companies, given that Switzerland is the 11th largest foreign direct investor in Brazil, where a large chunk of its investment is directed to finance and insurance.
This is the first agreement ever signed by either Brazil or the EFTA countries where there are clear obligations concerning the use of clean electricity for the provision of the services and consequences for noncompliance of environmental targets. Digital service providers from both sides will only benefit from the agreement if their country of origin utilize at least 67% of clean energy. That should create opportunities for innovations on more efficient forms of energy, and companies pioneering in this dynamic but often fluid space may favour their deployment in countries, like Brazil, where examination of patent applications directed at green energy technologies can be fast-tracked.
At the regulatory level, the digital services chapter indirectly reinforces compliance requirements in areas such as data protection, cybersecurity, and digital governance. Although the FTA does not establish a comprehensive framework for cross-border data flows, it highlights the need for cooperation among data protection authorities and convergence toward high privacy standards. This opens space for dialogue between EFTA and Mercosur regulators, particularly around interoperability between the EU’s GDPR and Brazil’s LGPD. For digital service providers, ensuring compliance across jurisdictions will be essential to access market benefits under the FTA.
The chapter on investments contains certain disciplines with a view of providing more certainty, transparency, and predictability regarding the investment from both sides. As to procurement, Brazil has maintained its long-standing industrial policy of leveraging public procurement as an economic policy. Procurement related to Brazil’s multibillion-dollar acquisitions by the unified public health system (SUS) is excluded altogether. Further, the agreement gives Brazil the right to apply margins of preference for goods and services manufactured locally. Despite that, not only does the Brazilian legislation already allow the participation of foreign suppliers in bids held in the country, but the Ministry of Health also frequently procures from foreign companies, including from EFTA countries.
The agreement also identifies cooperation areas in chapter 7, including combating antimicrobial resistance (AMR) and agricultural biotechnology. These are promising fields for joint initiatives, and increasing the exchange is to be welcomed as both blocs have complementary expertise. From a regulatory cooperation standpoint, the AMR and biotechnology chapters open the door for convergence of biosafety standards and mutual recognition of risk-assessment methodologies for genetically modified organisms (GMOs). This alignment will reduce asymmetries between Mercosur and EFTA frameworks, enhance predictability for agricultural biotech companies, and promote sustainable innovation. The environmental and climate-related commitments further indicate a move toward integrating regulatory approaches in energy efficiency, green technologies, and circular economy standards.
Stakeholders will note that Brazil has recently updated its AMR strategy for 2025-2030, paving the way for more investment in several areas, as its market is projected to grow significantly in the coming years. Also, the country’s agricultural biotechnology market also offers excellent opportunities for investors, given both greater governmental funding to attract R&D and the ability to tap into an agtech ecosystem that has expanded 25% since 2020. Innovation in the vast Mercosur agricultural market will attract foreign investment.
Intellectual Property Chapter: Key Highlights
Specifically regarding the protection of intellectual property assets, the Mercosur–EFTA Agreement contains several noteworthy provisions that reflect a balanced approach between innovation incentives, public interest, and sustainable economic growth.
The chapter explicitly recognizes the social dimension of intellectual property rights, stating that they serve not only to reward creativity and innovation but also to foster economic and social development, fair competition, and access to knowledge. It emphasizes the need to balance the interests of right holders and society, an approach aligned with Brazil’s Article 5, XXIX of Brazil’s Federal Constitution, which mandates that IP must fulfill a social function and promote technological and economic advancement.
The agreement encourages states to accede to other IP international agreements, such as the Patent Cooperation Treaty (to which Argentina and Paraguay are yet to join), but it does not mandate or require them to do so. This voluntary orientation reflects legal respect for each country’s institutional readiness, while signaling pathways for progressive harmonization with global IP frameworks.
Beyond the traditional focus on protection, the Agreement also highlights the importance of technology transfer and innovation promotion. State Parties are encouraged to adopt incentives, consistent with domestic resources and policies, to stimulate technological advancement and dissemination. This language strengthens the notion that IP policy should be development-oriented, complementing rights enforcement with mechanisms that enable capacity building and industrial cooperation in developing economies like those of Mercosur members.
In the field of public health, the text reaffirms the principles of the Doha Declaration on the TRIPS Agreement and Public Health and the 2005 TRIPS Amendment, ensuring that IP rules do not hinder measures to safeguard access to medicines and essential technologies. This commitment is coherent with Brazil’s historical stance at the World Trade Organization, where the country has consistently defended flexibilities and the use of compulsory licensing – although its actual use in Brazil has been exceedingly rare – when required to reconcile IP protection with the right to health. It preserves Brazil’s ability to continue implementing its Unified Health System (SUS) strategy while maintaining coherence with international obligations.
The section on copyright and related rights grants broadcasting organizations exclusive rights to authorize rebroadcasting, fixation, reproduction, and public communication of their signals. However, these provisions do not apply to Brazil, as national legislation (Law No. 9.610/1998) protects the content of broadcasts but does not confer exclusive neighboring rights to broadcasters themselves. This reflects Brazil’s domestic legal framework and policy priorities in the audiovisual sector.
With respect to trademarks, the Agreement adopts a broad definition of protectable signs, including sounds, and introduces enhanced protection for well-known marks. However, Brazilian law currently does not permit the registration of sound marks, although discussions are ongoing, so Brazil made a reservation to this clause. On the other hand. the country distinguishes between marcas notoriamente conhecidas, which are protected regardless of registration, and marcas de alto renome, which enjoy cross-sectoral protection subject to recognition by the INPI. This nuanced regime aligns partially with the Agreement but maintains Brazil’s domestic framework.
The patent provisions allow exclusions from patentability for diagnostic, therapeutic, and surgical methods, as well as plants and animals (other than microorganisms), and essentially biological processes, mirroring the exclusions under Brazil’s Industrial Property Law (Law No. 9.279/1996). The Agreement also promotes transparency by requiring publication of pending applications within 18 months from filing—or earlier upon applicant request—facilitating access to technical information and reducing duplication in R&D. Moreover, it urges expedited processing to avoid unreasonable delays, a goal aligned with Brazil’s recent progress in reducing patent backlogs and implementing priority examinations for strategic sectors.
For industrial designs, the Agreement harmonizes minimum protection terms, establishing 25 years in Brazil and EFTA States, and at least 15 years in Argentina, Paraguay, and Uruguay. It also allows shorter terms for component parts used in repairs, providing flexibility to balance exclusive rights and market competition, particularly in automotive and industrial equipment sectors.
The section on geographical indications (GIs) reinforces mechanisms to prevent misleading use and oppose trademarks that conflict with protected GIs. It also introduces mutual recognition between Mercosur and EFTA members – according to Brazilian diplomats, the experience with the agreement with European Union helped the parties to agree on this. Liechtenstein and Switzerland’s GIs - largely wines, cheeses, spirits, and agricultural goods - will gain protection in Mercosur, while Brazilian GIs such as coffee, cachaça, fruits, handcrafts, stones, and regional food products, will be recognized in EFTA countries. This exchange enhances market access, consumer trust, and cultural value, highlighting Brazil’s diverse GI portfolio, which goes well beyond the wine-focused designations typical of Argentina and Uruguay, for example.
Finally, the Agreement may bring change in remedies and enforcement. It requires Parties to establish criminal procedures and penalties for willful infringements of IP rights on a commercial scale. While Brazil already complies with such standards through the Industrial Property Law (Articles 183–195), Argentina and Uruguay currently lack criminal provisions for GIs and topographies, and Paraguay for patents. These commitments may lead to legal reforms adjustments in neighboring jurisdictions, contributing to greater regional convergence in IP enforcement.
Overall, the IP chapter of the Mercosur–EFTA FTA reflects a modern, balanced, and cooperative framework. It consolidates Brazil’s existing IP regime, preserves public policy flexibility, and fosters an environment conducive to innovation, technology transfer, and fair competition, aligning domestic interests with international best practices.
Next Steps
The next steps until the agreement produces legal effects will be its translation into the languages of the countries. After that, the parties will carry out their respective internalisation proceedings. In the case of Brazil, that involves approval by Congress. The agreement will enter in force on the first day of the third month following the date on which at least one state from each bloc have deposited their instrument of ratification, acceptance or approval.
With the FTA in place, companies will need to navigate the diverse legal frameworks of the Mercosur countries. In this context, reputable legal partners like Daniel Law, who can provide support across the region, become invaluable in shaping effective regional strategies.
