After years of negotiation, the EU–Mercosur trade agreement is entering its next phase.

The European Commission has completed its final procedural step, clearing the way for the deal to take provisional effect from May 1, 2026—a move that could gradually reshape trade flows between Europe and South America.

But for the pulp and paper industry, the impact will not be immediate.

👉 It will be slow, selective, and structurally nuanced

What the Deal Covers—and Why It Matters

The agreement connects:

• EU member states
• Mercosur countries: Argentina, Brazil, Paraguay, Uruguay

Its core objective:

👉 Reduce trade barriers and improve market access between the two regions

For pulp, paper, and packaging, this means:

• Potential export expansion
• Gradual tariff reductions
• Increased demand from downstream industries

Tariffs: No Immediate Shock to the Market

Contrary to expectations, no tariffs on pulp, paper, or board are removed at the start.

According to industry analysis from Cepi:

• Tariff reductions will be phased in over 4 to 15 years
• Some product categories remain excluded

👉 This is critical:

The agreement is designed to avoid sudden market disruption

Long-Term Gains: Where the Real Impact Lies

By the end of the transition period:

• 85% of EU pulp exports (by volume) will be tariff-free
• 90% of paper and board exports (by volume) will be liberalized

However, not all segments benefit equally.

Strongest Gains:

• Printed paper products → 93% tariff-free access

More Restricted:

• Converted paper and board → only 54% liberalized by value

👉 This reflects a clear policy direction:

Higher-value products gain faster access than basic converted goods

The Current Imbalance: Why This Deal Exists

Since 2004:

• The EU has maintained zero import tariffs on pulp and paper

Meanwhile:

• Mercosur countries have kept protective duties

👉 Result:

An uneven trade environment for European exporters

This agreement is essentially:

👉 A correction of that imbalance over time

Will Imports into Europe Increase?

Short answer: Not significantly

Because:

• EU tariffs are already zero
• Market access is already open

👉 This means:

The deal is more about EU export growth than import pressure

Where Demand Will Actually Grow: Packaging

The biggest indirect impact will not come from pulp itself—but from packaging demand.

As trade increases in:

• Food products
• Processed goods
• Animal proteins

👉 Demand for:

• Containerboard
• Boxboard
• Corrugated packaging

will gradually increase

A Realistic Outlook: Incremental, Not Disruptive

Industry analysts suggest:

👉 This is not a “market-changing” agreement

Instead:

• Growth will be modest and gradual
• Demand increases will follow trade expansion patterns

The Political and Environmental Tension

Despite its economic goals, the agreement faces strong resistance.

Environmental organizations such as Greenpeace have raised concerns that:

• The deal could undermine the EU’s deforestation policies
• It may weaken enforcement of sustainability standards

A key point of debate:

👉 Can trade expansion coexist with strict environmental regulation?

The Role of EUDR: A Separate but Critical Factor

The EU Deforestation Regulation (EUDR) remains independent of the trade deal.

This means:

• Compliance is still mandatory
• Operators must meet sustainability requirements regardless of tariff changes

👉 In practice:

Trade access does not equal regulatory relaxation

Agricultural Pressure: The Hidden Conflict

Much of the political resistance comes from agriculture.

EU farmers are concerned about:

• Lower-cost imports from Brazil and Argentina
• Increased competition in:
  • Beef
  • Poultry
  • Sugar

👉 This tension could influence how smoothly the agreement is implemented

What About Other Commodities?

The impact varies by sector:

Limited Short-Term Impact:

• Grains
• Oilseeds

(Trade already driven by price and quality)

Delayed Impact:

• Vegetable oils → tariff cuts after year 7
• Biodiesel → tariff cuts after year 10

Potential Growth:

• Meat exports from Brazil

Industry Insight: What This Means for Paper & Packaging Players

For Pulp Producers:

• Gradual expansion into Mercosur markets
• More predictable long-term access

For Packaging Manufacturers:

• Indirect demand growth from increased trade
• Focus on export-driven supply chains

For Converters:

• Opportunities in higher-value segments
• Continued protection in some converted products

Final Thought

This agreement is not a short-term disruption.

It is a long-term structural alignment of trade flows

Not a sudden shift
But a gradual rebalancing of market access

Last Updated on 09/04/2026 by Jota Machinery