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EU–Mercosur Agreement Expands Trade Opportunities For Cyprus

by THEFUTURE.TEAM

March 3, 2026

EU – Mercosur Agreement As A Strategic Imperative

The EU–Mercosur trade agreement, currently under review by the European Court of Justice following a European Parliament decision, would establish one of the world’s largest free trade areas. The deal предусматриває phased tariff elimination on approximately 92% of Mercosur goods over 10 years.

Current EU tariffs on most agricultural and agro-food imports range between 10% and 20%. The agreement includes quota systems and safeguard mechanisms allowing temporary tariff reinstatement in cases of import surges or demonstrated harm to EU producers.

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Deepening Trade Ties With Argentina

Data from Cyprus’ Ministry of Commerce for 2024 show significant reliance on Argentine soybean meal for animal feed. Imports reached €64.8 million, with Argentina covering 96.2% of Cyprus’ demand.

Imports from Brazil totaled €15.18 million, largely driven by coffee and concentrated fruit juices. Tariffs on soybean meal, currently between 10% and 14%, are expected to decline gradually to 0% during the transition period. Similar reductions apply to selected categories, including shelled peanuts and citrus products.

Brazil: A Critical Source Of Raw Materials And Industrial Goods

In 2024, Brazil supplied 80.06% of Cyprus’ imported unroasted coffee (€4.37 million) and 62.10% of concentrated orange juice imports (€6.35 million, 1.43 million kilograms).

Import duties vary by category. Coffee carries a 0% tariff, while fruit juices, footwear, vehicles, and machinery face duties ranging from 4% to 20%, reflecting broader EU trade structures.

Implications For Cypriot Exports

Cyprus’ exports to Argentina totaled €1.78 million in 2024. Machinery and mechanical equipment accounted for more than 55% of export value, followed by pharmaceuticals, plastic components, and water filtration systems.

Export volumes remain limited, highlighting the asymmetric structure of bilateral trade.

Looking Ahead: The EU – Mercosur Opportunity

The agreement предусматриває tariff elimination on approximately 91% of EU exports to Mercosur over a decade. For Cyprus, this could improve access to selected industrial and pharmaceutical products.

The economic impact will depend on implementation timelines and the ability of Cypriot firms to compete within Mercosur markets.

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Cyprus Industrial Sector Demonstrates Robust End-Of-Year Performance

Recent data from the Cyprus Statistical Service show that the Industrial Turnover Index reached 139.8 in December 2025, compared with a base value of 100 in 2021. The figure represents a 4.9% increase compared with December 2024.

Strong Momentum Across the Board

For the full year, the index increased by 5% compared with 2024. The figures indicate continued activity across several industrial sectors in Cyprus.

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Manufacturing And Mining Drive Growth

Manufacturing recorded the largest increase, with the index reaching 146.8 in December. This represents a 7.1% increase compared with the same month a year earlier. Mining and quarrying also recorded a higher turnover, with an increase of 6%.

Sectoral Disparities Highlight Strategic Challenges

Not all sectors recorded growth during the same period. The electricity supply sector reported a 3.8% decline, while the water supply and materials recovery sector decreased by 6.8% year-on-year.

Aligned With European Standards

The Industrial Turnover Index measures monthly changes in turnover across key industrial sectors, including mining, manufacturing, electricity supply, and water supply. Under the NACE Rev. 2 classification used across the European Union, the index covers sections B, C, D, and E. Activities such as sewerage, waste collection, and remediation are not included.