The agreement, announced in December 2024, marks a historic milestone after more than 25 years of negotiations and paves the way for greater commercial integration between Portugal and the South American bloc. Despite the challenges that remain for its ratification, Portugal views this partnership as a strategic opportunity to diversify and expand its business ventures.

Portuguese companies must start preparing for this new scenario, as many of their European competitors are already doing so. With the agreement, there will be greater access to raw materials from countries like Brazil and Argentina, benefiting various national industries, from agribusiness to technology. However, to compete effectively in this new environment, companies must understand the specifics of the South American market.

Brazil, for instance, is a vast country composed of 27 states with diverse economies. States like São Paulo and Bahia offer large, competitive markets, each with its own regulatory and commercial particularities. To position themselves strategically, Portuguese companies should adopt tailored approaches for each region, emphasizing the importance of local partnerships and adapting to consumption patterns and regulations.

Portugal has maintained a strong trade relationship with Brazil, which reached record-high trade volumes in 2024. However, much of this trade remains concentrated in a few sectors, such as wine, olive oil, and vehicles. There is, therefore, significant potential for diversification, particularly in technology, energy, and infrastructure.

Brazil is one of the most protectionist markets in the world, but with the Mercosur agreement, some trade barriers may be reduced. This does not mean that challenges will disappear entirely. Bureaucracy, complex taxation, and regulatory requirements will still be key considerations for any Portuguese company looking to establish or expand its presence in the country.

A factor that may ease this market entry is the growing Brazilian community in Portugal. With an increasing number of Brazilians living and investing in the country, the connection between the two nations is strengthening. This makes Portugal a more attractive destination for Brazilian investors while simultaneously opening doors for Portuguese companies in Brazil.

Another significant step in strengthening economic ties between Portugal and Brazil is the opening of the APEX Brasil office in Lisbon. APEX Brasil, the Brazilian Trade and Investment Promotion Agency, will serve as a crucial support hub for Brazilian and Portuguese companies seeking to expand into each other’s markets. This office will also represent other Brazilian institutions, such as Sebrae and Fiocruz, fostering commercial, scientific, and business exchanges between the two nations.

The establishment of APEX Brasil in Portugal acknowledges Lisbon’s strategic position as a gateway to Europe. Furthermore, it highlights the growing importance of the Portugal-Brazil relationship in sectors such as tourism, energy, construction, and technology. This agency's presence is expected to boost bilateral investments and encourage a more dynamic trade flow between the two countries.

With Brazil reclaiming its position among the world’s top ten economies and holding the G20 presidency in 2024, its global influence is set to grow. Portugal, in turn, is well-positioned to benefit from this expansion, both through strengthening its exports and attracting Brazilian investments.

The success of this new phase will depend on Portuguese companies’ ability to adapt to the changing dynamics of the South American market, as well as the effectiveness of trade promotion policies and investment support. The opening of APEX Brasil in Lisbon represents an important milestone in this regard, providing a direct channel to facilitate business and partnerships between the two nations.

Portugal now has a unique opportunity to solidify its presence in Mercosur and diversify its economy. With strategic planning, Portuguese companies can expand their operations and strengthen trade ties in one of the world’s most promising markets. The moment calls for vision, preparation, and initiative, but the long-term benefits could be highly rewarding.

Author

Paulo Lopes is a multi-talent Portuguese citizen who made his Master of Economics in Switzerland and studied law at Lusófona in Lisbon - CEO of Casaiberia in Lisbon and Algarve.

Paulo Lopes