
As we enter 2025, the world continues to grow more interconnected, with free trade agreements (FTAs) playing a central role in shaping global commerce. A landmark event in this trend occurred on December 6, 2024, when the Mercosur-EU agreement was signed, marking a significant step forward in trade relations between Latin America—particularly the Mercosur countries: Argentina, Brazil, Paraguay, and Uruguay—and Europe. However, what does this mean for businesses? Let us explore why FTAs are so important and how they are unlocking exciting new opportunities in 2025.
At ALKADO, we are all about fostering stronger economic ties between Central Europe, particularly Slovenia, and Latin America, with a special focus on Colombia and Ecuador. So, even though we’re not directly involved in every single free trade agreement out there, it’s essential for us and other businesses to understand how these agreements are shaping the future of trade.
Why are FTAs so Important for Europe and Latin America?
FTAs are essential because they break down barriers to trade—like high tariffs and import restrictions—making it easier for businesses to access new markets. These agreements create a win-win situation, where companies on both sides can grow and thrive.
For Latin American companies, it’s about gaining easier access to the vast European market, while European businesses can expand into Latin America without dealing with traditional trade obstacles.
It’s a two-way street.
The Key EU-Latin America FTAs:
The European Union has already signed several important FTAs with Latin American and Caribbean countries (LAC), and these agreements are only going to get more important as we move through 2025. Here are a few that are shaping the way businesses can trade:
- EU-Mercosur Agreement: This is a major deal between the EU and the Mercosur countries (Argentina, Brazil, Paraguay, and Uruguay), signed on December 6, 2024. It is expected to make trade between the two regions easier, with reduced tariffs on agricultural products, automotive goods, and more. European businesses will have greater access to the Mercosur market, while the Mercosur countries can more easily export their products to the EU.
- EU-Andean Community Agreement: This one is particularly important for Colombia, Ecuador, and Peru, which are part of the Andean Community (CAN). The EU-Andean Community FTA makes it easier for these countries to export their key agricultural products—like cacao, coffee, and fruits—to the EU. At the same time, European companies benefit from zero tariffs on many of their goods, like machinery, pharmaceuticals, and technology when exporting to the CAN countries.
- EU-Central America Association Agreement: This agreement, signed with Costa Rica, Nicaragua, Panama, Honduras, Guatemala and El Salvador, opens up more opportunities for trade, especially in sectors like technology, agriculture, and manufacturing.
- EU-Mexico FTA: A deal that allows for free trade between the EU and Mexico, focused on eliminating tariffs and improving regulatory cooperation. This agreement is great for sectors like technology, pharmaceuticals, and automotive.
A Closer Look at the EU-Andean Community FTA
The EU-Andean Community FTA offers significant benefits for Colombia and Ecuador, especially as they work to expand exports to Europe. With this agreement, products like Colombian cacao now face fewer trade barriers, making it easier for these countries to tap into the European market. This opens doors not just for agricultural exports, but also for Colombian and Ecuadorian companies in industries like pharmaceuticals, renewable energy, and technology.
But the advantages flow both ways. European businesses also stand to gain from reduced tariffs, making it easier for them to export goods such as machinery, renewable energy technologies, and pharmaceuticals to the CAN countries. This agreement helps to create a more stable and predictable trading environment, strengthening economic ties between both regions.
Looking Ahead: What 2025 Holds for EU-Latin America Trade
As we look to 2025, FTAs will continue to play a pivotal role in strengthening economic ties between Europe and Latin America. For Colombia and Ecuador, the EU-Andean Community Agreement remains a vital enabler of trade, particularly for agricultural exports like cacao and coffee. European businesses also gain from reduced tariffs on their goods, providing greater access to the rapidly growing Latin American markets. This is especially crucial as European countries seek to diversify their trade partners and reduce reliance on traditional markets, ensuring greater economic resilience and opportunities for growth.
At ALKADO, we see the incredible potential these agreements bring, and we’re excited to help businesses from both Europe and Latin America take advantage of the opportunities they provide.