Sustainability has ceased to be a niche issue and has become a necessary condition for competing in global markets.
Just a few days ago in Asunción, Paraguay, the Free Trade Agreement between Mercosur and the European Union was signed. While most discussions have focused on tariff reductions and the opportunities this represents for South America, a major shift in international taxation should not be overlooked.
From 1 January 2026, the EU will begin applying the Carbon Border Adjustment Mechanism (CBAM)—a fundamental change in global trade rules.
This environmental levy is far from minor: it is the first regulation of its kind worldwide that requires the application of a “carbon price” on certain imported goods, in order to match the costs already borne by European producers complying with the bloc’s stringent climate regulations.
The objective of this tax is to prevent so-called “carbon leakage”, whereby European companies relocate production to countries with looser environmental standards and then re-import those goods without paying for the associated emissions.
This is not only relevant for Mercosur exports to the EU—which are expected to grow exponentially in the coming years—but also reshapes how companies think about their value chains, production costs and their relationship with the markets they seek to compete in.
CBAM: what it is and why it matters
From this year onwards, European importers of carbon-intensive goods—such as steel, cement, aluminium, fertilisers, electricity and hydrogen—must report the embedded carbon emissions of those products and, once imports exceed 5,000 tonnes, purchase equivalent CBAM certificates.
According to the European Commission, carbon certificates will be acquired from the national authorities of the importer’s country of establishment. Certificate prices will be calculated based on the auction price of emission allowances under the EU Emissions Trading System (EU ETS), expressed in euros per tonne of CO₂ emitted—using a quarterly average in 2026 and a weekly average from 2027 onwards. At present, the price per tonne stands at around €89.
Importantly, if importers can demonstrate that a carbon price has already been paid during the production of the imported goods, the corresponding amount may be deducted.
This measure changes the rules of international trade in several ways:
-
For the first time globally, an environmental tariff is applied based on the product’s carbon footprint, within mechanisms compatible with WTO rules.
-
CBAM seeks to level environmental compliance costs between European producers and foreign suppliers.
-
The regulation forces international sellers to improve environmental practices, implement emissions measurement systems, strengthen supplier controls and adopt decarbonisation strategies—even if production is located in countries with weaker regulations—otherwise they may face unexpected costs, penalties or a loss of competitiveness.
-
Europe takes the lead and pressures other regions and countries to follow the same path, ensuring that climate commitments under the United Nations framework are effectively implemented.
Impact of CBAM on the EU–Mercosur Agreement
The recent agreement between Mercosur and the European Union represents a historic opening of markets, tariff reductions and a more stable framework for exports, imports and increased foreign direct investment (FDI) in South America.
However, the definitive entry into force of CBAM forces Mercosur exporters to rethink their production and logistics chains.
Although the bloc’s exports are currently focused on agro-industrial products, food, pulp and forestry goods, Brazil, for example, has become a major oil supplier to the EU, accounting for 26% of its total exports, worth €11.9 billion in 2024.
One of the main uncertainties surrounding CBAM was whether the future revenues generated by this environmental levy would be used to finance the energy transition in developing countries. The European Commission has clarified that these resources will not be directly allocated for this purpose.
Instead, this work will continue through the Global Gateway initiative, which contributes to the decarbonisation of energy systems and the reduction of emissions intensity in production, with the aim of lowering the embedded carbon content of exports to the EU. Within Mercosur, Global Gateway has already invested more than €1.8 billion in strategic sectors such as energy, transport and, in particular, cooperation in lithium extraction and processing.
As this analysis shows, international trade and sustainability are no longer separate issues. The success of the EU–Mercosur agreement will also depend on the ability of Mercosur countries to accelerate the energy transition and build cleaner production chains that meet the demands of a carbon-constrained global economy.
