Brazil Adds Commercial Weight to Singapore-Mercosur Trade Pact

Brazil’s implementation of the Mercosur-Singapore Free Trade Agreement has brought the bloc’s largest economy into the pact, putting tariff reductions into effect across a bilateral trading relationship worth $10.7 Bn in 2025.

The agreement took effect between Singapore and Brazil on August 1, following Paraguay in February and Uruguay in March. Argentina, the remaining founding member of Mercosur, is still completing its ratification procedures.

Mercosur, short for Mercado Común del Sur, or the Southern Common Market, is a South American economic bloc founded in 1991 by Argentina, Brazil, Paraguay and Uruguay to deepen regional economic integration and reduce trade barriers. Bolivia has since joined the bloc. The Singapore trade agreement covers Mercosur’s four founding members, with Argentina the last to complete ratification.

Brazil significantly expands the commercial base covered by the agreement. It is Mercosur’s largest economy and one of Singapore’s biggest trading partners in Latin America. Similarly, Singapore is Brazil’s largest trading partner in Southeast Asia, according to Singapore’s Ministry of Trade and Industry.

Under the agreement, Mercosur members will gradually remove import duties on nearly 96% of products traded with Singapore. About a quarter of these products will become duty-free immediately, while tariffs on the rest will be removed in stages over four, eight, 10 and 15 years. The products covered account for about 91% of Mercosur’s current imports from Singapore.

The South American bloc has excluded 433 tariff lines, or 4.2% of the total, from preferential treatment, including some electrical machinery, plastics and optical and photographic equipment.

Singapore, by comparison, is immediately eliminating tariffs on goods originating from Mercosur.

Brazil’s own assessment suggests the initial fiscal cost of tariff reductions will be relatively small against the size of the trading relationship. Its government estimates that import-duty revenue will fall by about 19.5 Mn Brazilian reais in the first year, 33.2 Mn reais in the second and 47 Mn reais in the third as the tariff schedule is implemented.

The estimate assumes trade volumes will remain unchanged.

Brazilian authorities said higher imports, prompted by lower tariffs, could partly offset the decline in duty rates, meaning the eventual revenue impact could be smaller.

The pact extends beyond goods. It sets rules covering services, investment, government procurement, e-commerce, customs procedures, and intellectual property, while providing more predictable market access conditions for companies operating between Singapore and the four founding Mercosur economies.

Those links already have some scale. Close to 200 Singapore companies operate across Mercosur markets, with Brazil hosting the highest concentration of Singapore companies in Latin America. Trade with the four founding economies accounted for more than 30% of Singapore’s goods trade with Latin America in 2025.

Singaporean companies are active across the region in manufacturing, infrastructure, energy, agri-commodities, hospitality and digital services. Brazil and the wider Latin American market are also important sources of food and agricultural commodities, as Singapore seeks to diversify its imports of products such as meat, fruit and vegetables.

The agreement also lands as Mercosur steps up efforts to broaden its trade relationships with Asia. The bloc launched economic partnership negotiations with Japan in June, while Brazil and South Korea agreed in July to accelerate talks on a potential Mercosur trade deal. Brazil has also backed progress towards negotiations between Mercosur and China.

The Mercosur-Singapore pact was signed in Rio de Janeiro in December 2023, following negotiations that began in 2018. It is Singapore’s 29th free trade agreement, its first with Mercosur’s founding states and Mercosur’s first free trade agreement with a Southeast Asian country.

With Brazil joining Paraguay and Uruguay in implementing the agreement, three of the four founding Mercosur economies are now operating under it. Once Argentina completes ratification, the agreement will be in force with all four founding Mercosur members.