After decades of negotiations, the trade agreement between Mercosur and the European Union has returned to the center of attention in the business and institutional landscape.
While the core focus of the negotiations has been tariff reduction and trade expansion, the agreement’s implications go well beyond economics. From a legal perspective, particularly under Brazilian labor law, the agreement is expected to have meaningful impacts, prompting companies to take a closer look at their employment practices, compliance policies, ESG agendas, and governance structures.
The agreement includes commitments related to fundamental labor rights, aligned with the conventions of the International Labour Organization (ILO), such as:
1. The prohibition of child labor and forced labor;
2. Respect for freedom of association and collective bargaining;
3. The fight against discrimination in the workplace; and
4. The promotion of decent working conditions.
These principles are already part of Brazilian law, so the agreement does not represent a regulatory overhaul. The key shift lies in heightened expectations around effectiveness, consistency in practice, and the ability to demonstrate real compliance. From a labor law standpoint, the agreement points less toward abrupt legislative changes and more toward a refinement of corporate practices.
Potential risks that deserve attention include:
1. Increased reputational exposure;
2. Stricter labor audits, particularly across global supply chains; and
3. Growing pressure to revisit informal practices or arrangements that operate in legal “gray areas.”
At the same time, this environment creates opportunities. Companies with strong labor governance, well-structured compliance programs, and consistent ESG practices are more likely to gain a competitive edge and increase their appeal to international investors and business partners. Implementation of the agreement will be gradual and depends on ratification by the parliaments of the signatory countries, pointing to a medium- to long-term timeline. Even so, the current stage already calls for a preventive approach.
Strategic measures include:
1. Reviewing internal labor policies;
2. Mapping risks within the supply chain;
3. Strengthening leadership training;
4. Properly documenting existing best practices; and
5. Ensuring alignment between institutional messaging and day-to-day operations.
By raising internal standards even before the agreement fully enters into force, organizations can reduce litigation risks, increase legal predictability, and strengthen their competitive positioning in an increasingly demanding global environment.
The Mercosur–EU Agreement should not be viewed merely as a trade deal, but as a clear signal of modernization in economic and labor relations. In a more connected and sophisticated market, operational efficiency combined with legal certainty must sit at the core of business strategy, particularly looking ahead to 2026 and beyond.
