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UE-Mercosul trade agreement opens Brazilian public tender market to European companies

The recently sealed trade agreement between the European Union and Mercosur has opened a new possibility for European companies: the Brazilian public tender market. Theoretically, when the agreement enters into force, European companies will be able to bid in Brazil on an equal footing, as if they were Brazilian, and vice versa, which are currently quite difficult.

There is still a possibility of changing the predictions, but in any way more participants are expected to enter the State's purchasing market, in which case we must be prepared for increased competition and falling prices. It is also to be expected that not every sector will be included, as exceptions should be imposed in sectors considered important for public policy, such as science and technology, and some fields of health and small business stimulation. Plus, European negotiators are specially interested in public works bids, besides government purchases in the areas of health, vehicles and tractors.

Another possibility shall be the possible flexibility of the regional cabotage market, which will allow, for example, EU vessels to pick up cargo in the port of Santos and transport it to the port of another Mercosur country; the reduction of the percentage of maximum imported content that a product needs to have to be considered European, despite fears that products will enter Mercosur labeled as European, but actually have many components imported from East Asia; and the inclusion of the so-called precautionary principle in the agreement, which allows a country to suspend the import of a particular good if it is found to be harmful to the environment or to occupational health.

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