São Paulo – Nine years after entering into force, the free trade agreement between Egypt and Mercosur will eliminate the remaining import tariffs set out in the deal by September. Duties under basket “D,” which includes products such as plastics, coconut and related products, and nuts, will no longer be charged. Mercosur is made up of Brazil, Argentina, Paraguay, and Uruguay—Bolivia became a full member in 2024.
The free trade agreement with Egypt was signed in 2010 and entered into force on September 1, 2017. It established a tariff reduction schedule divided into five baskets: A, B, C, D, and E. Products in basket A were granted immediate duty elimination. Basket B products saw tariffs reduced by 25% every twelve months until reaching full exemption in September 2020. Tariffs on basket C products were reduced by 12.5% per year through 2024, while duties under basket D have been cut by 10% annually until reaching full elimination in September this year. Basket E will have a tariff reduction schedule to be defined.
Basket A includes products such as turkeys and mercury chloride; basket B includes items such as catfish and pirarucu; basket C comprises products like wood pulp and laminated wood; and basket D includes polymers, coconut, and related products. The tariff reduction schedule is detailed, meaning that different types of the same product—such as wood, coffee and derivatives, or meats—may be distributed across different baskets.
Each product exported by a country has a number within the Mercosur Common Nomenclature (NCM). This number can have between two and eight digits: two digits indicate the product chapter, and eight digits specify the product’s processing details. For example, coffee is chapter 09. Roasted and ground, non-decaffeinated coffee is 0901.21.00, while green coffee is 0901.11.10. Trade agreement baskets, such as Mercosur–Egypt, outline baskets, tariff reductions, and even exceptions for each product and type of processing.
For Welber Barral, partner at BMJ Consultores Associados, the tariff reduction of basket D products could lead to increased trade between Mercosur and Egypt, and between Brazil and Egypt. He considers that, so far, the agreement has been beneficial for all countries involved.
“Egypt is a country with a large market, a gateway to Africa, so it is of interest to Mercosur countries, and Brazil has a very large trade surplus there, mainly due to food exports. Brazil has also increased imports, especially fertilizers. Therefore, the bilateral agreement is relevant for Mercosur, Brazil, and Egypt,” Barral notes.
Data from Brazil’s Ministry of Development, Industry, Trade, and Services, compiled by the Market Intelligence department of the Arab-Brazilian Chamber of Commerce (ABCC), show that Brazil’s exports to Egypt rose from USD 1.7 billion in 2016, before the agreement took effect, to USD 3.9 billion last year. Meanwhile, Brazil’s imports of Egyptian products jumped from USD 94.4 million in 2016 to USD 1.38 billion last year.
The main products exported to Egypt in 2025 were corn, sugar, and boneless beef. The bloc’s main imports were phosphate and nitrogen fertilizers.
Opportunities for Mercosur, Brazil, and Egypt
Barral notes, for example, that Brazil is a major supplier of certain categories of plastics. While it also supplies other types, Egypt is a large consumer of plastic. Therefore, the tariff reduction for basket D plastic products could create opportunities for Brazilian exporters. The same applies to coconut and nuts from Brazil. “The benefited products can boost trade because removing the tariff makes Brazilian goods more competitive,” he says.
According to a survey by the Market Intelligence department of the ABCC, in 2025 Brazil exported USD 37.06 million of basket D products to Egypt, an 18.4% increase over 2021, representing 1% of total exports. The main products in this basket exported to Egypt were cashew nuts, insulin-containing medicines, chemical wood pulps, and tubes made of other steel alloys. Market Intelligence identified export opportunities for rubber- or plastic-soled shoes, electric motors with power up to 7.5 kW, and fresh melons.
The same survey shows that last year Brazil imported USD 195.04 million of basket D products from Egypt, a 69.2% increase over 2021, representing 14% of total imports from Egypt. The main products purchased were frozen strawberries, iron or non-alloy steel machine wires, other table and kitchen service items, and uninsulated iron or steel ropes and cables.
Market Intelligence identified opportunities for Egyptian exports to Brazil in ethylene copolymers, sets of wires for spark plugs, other parts for electrical circuit-breaking devices, other parts for tractors and motor vehicles, and other parts for internal combustion engines.
Among Arab countries, Mercosur also has a free trade agreement with Palestine. A partnership with the United Arab Emirates was planned for 2025 but is still under negotiation.
Read more:
Mercosur, UAE hold new round of negotiations
Translated by Guilherme Miranda
