Brazil–MERCOSUR Trade Agreement: Opportunities and Challenges for Bangladesh Exports
Md. Joynal Abdin
Founder & Chief Executive Officer, Trade & Investment Bangladesh (T&IB)
Executive Director, Online Training Academy (OTA)
Secretary General, Brazil Bangladesh Chamber of Commerce & Industry (BBCCI)
For Bangladeshi exporters seeking market diversification beyond traditional destinations, Brazil represents both a vast consumer market and a strategic entry point into South America. However, Brazil does not operate in isolation. Its trade policy is deeply embedded within the framework of the MERCOSUR (Southern Common Market), a regional customs union that shapes tariff structures, trade preferences, and external market access.
As Bangladesh’s exports to Brazil continue to grow particularly in readymade garments, jute goods, footwear, and light engineering products it becomes essential for exporters to understand how MERCOSUR’s trade rules influence competitiveness, pricing, and long-term market access. This article provides a comprehensive and exporter-focused analysis of the Brazil–MERCOSUR Trade Agreement and its implications for Bangladesh’s export prospects.
MERCOSUR Trade Agreement
MERCOSUR was established in 1991 under the Treaty of Asunción with the objective of creating a common market among its members through the free movement of goods, services, and factors of production. Over time, MERCOSUR has evolved into a functional customs union, applying a Common External Tariff to imports originating from non-member countries while allowing preferential, often duty-free, trade among its members.
For non-MERCOSUR countries such as Bangladesh, this structure means that exports to Brazil are generally subject to the bloc’s external tariff regime, unless specific exemptions, tariff-rate quotas, or special arrangements apply. MERCOSUR also coordinates external trade negotiations collectively, which has significant implications for third-country exporters competing with preferential trade partners.
Member Countries of MERCOSUR
The full members of MERCOSUR include Brazil, Argentina, Paraguay, and Uruguay. Bolivia is in the process of full accession, while Venezuela remains suspended.
Among these members, Brazil is by far the largest economy and the principal import destination for Bangladeshi products. Nevertheless, MERCOSUR’s collective policies influence how goods move across the bloc, making regional dynamics relevant even for exporters initially targeting only the Brazilian market.
Current State of Trade and Investment Within MERCOSUR
Intra-MERCOSUR trade benefits from reduced tariff barriers and harmonized customs procedures, encouraging regional supply chains in sectors such as agribusiness, automobiles, chemicals, and energy. Brazil and Argentina dominate intra-bloc trade flows, while Paraguay and Uruguay play important roles in agriculture, logistics, and niche manufacturing.
Externally, MERCOSUR maintains a cautious but evolving approach toward global trade integration. Periodic adjustments to the Common External Tariff, sector-specific exemptions, and ongoing negotiations with external partners reflect the bloc’s effort to balance domestic industry protection with global competitiveness. These internal dynamics indirectly affect Bangladesh by shaping Brazil’s import demand, cost structures, and supplier preferences.
Opportunities of MERCOSUR for Member States
For its members, MERCOSUR offers economies of scale, stronger bargaining power in international negotiations, and protection for sensitive industries through coordinated tariff policies. The bloc’s unified external stance allows member states to negotiate trade agreements with major global partners as a collective, enhancing their leverage.
While these advantages are primarily enjoyed by member countries, they also define the competitive environment faced by non-member exporters, including Bangladesh.
MERCOSUR Provisions Hindering Trade with Non-MERCOSUR Countries
From the perspective of Bangladeshi exporters, the Common External Tariff remains the most significant structural barrier. Many manufactured goods entering Brazil from non-MERCOSUR countries face higher tariffs compared to intra-bloc trade or imports from preferential partners.
Additionally, MERCOSUR’s pursuit of free trade agreements with other regions creates the risk of preference erosion for Bangladeshi products. As preferential partners gain tariff reductions, Bangladesh’s exports may become relatively more expensive unless offset by quality, reliability, or product differentiation. Beyond tariffs, regulatory requirements, customs documentation, technical standards, and trade remedies can further complicate market access for exporters unfamiliar with the Brazilian regulatory environment.
How Bangladesh Can Increase Trade with MERCOSUR Countries?
Bangladesh can enhance its export performance in Brazil and the wider MERCOSUR region by adopting a strategic, compliance-driven approach. Exporters should focus on sectors where Bangladesh already has demonstrated competitiveness, such as readymade garments, jute and jute goods, home textiles, footwear, leather products, ceramics, and selected light engineering items.
Strengthening buyer relationships, ensuring strict compliance with Brazilian standards, and improving logistics planning are essential for long-distance markets like South America. On a broader level, trade promotion initiatives, commercial diplomacy, and structured engagement with Brazilian importers can help reduce informational and procedural barriers.
Opportunities and Challenges
Brazil’s large consumer base, diversified industrial structure, and growing demand for competitively priced imports present clear opportunities for Bangladeshi exporters. Entering Brazil can also serve as a stepping stone to other South American markets.
However, challenges remain significant. High tariffs under the Common External Tariff, intense competition from MERCOSUR members and preferential trade partners, long shipping times, and stringent compliance requirements all demand careful planning and sustained investment by exporters.
Recommendations
Bangladeshi exporters should treat Brazil as a strategic, long-term market rather than an opportunistic destination. This requires investing in product quality, documentation, sustainability compliance, and localized marketing strategies. Exporters should also monitor changes in MERCOSUR’s tariff policies and external trade agreements to anticipate shifts in competitiveness.
At the institutional level, enhanced trade facilitation support, market intelligence, and exporter capacity-building initiatives can play a crucial role in strengthening Bangladesh’s presence in the MERCOSUR market.
Closing Remarks
The Brazil–MERCOSUR Trade Agreement framework significantly shapes the conditions under which Bangladeshi exports enter the Brazilian market. While structural barriers exist, informed strategy, strong compliance, and focused market development can allow Bangladesh to expand and sustain its export footprint in Brazil and beyond. Understanding MERCOSUR is therefore not optional but essential for any Bangladeshi exporter with long-term ambitions in South America.