Following with our previous article: “Latin America: Panama Advances Toward Full Mercosur Membership and is Removed from EU’s High-Risk Jurisdiction List,” Mercosur has recently signed (on September 16, 2025) a free trade agreement with the European Free Trade Association (EFTA), a European regional trade association composed of Switzerland, Norway, Liechtenstein, and Iceland.

The new Mercosur-EFTA Agreement addresses, among others, the following areas: trade of goods and services; rules of origin; trade facilitation and defense; sanitary and phytosanitary measures; technical barriers to trade; investments; intellectual property; trade and sustainable and development.

The Mercosur-EFTA Agreement is expected to bolster trade and strengthen linkages between the two blocs, improving market access across sectors such as industrial goods, agriculture, energy and mining commodities, fishery products, pharmaceuticals, and services (for example professional and financial services). Moreover, the agreement is anticipated to stimulate and increase Foreign Direct Investment between both regions.

Although EFTA countries have comparatively smaller populations than Mercosur, they have very high purchasing capacity, with some of the highest levels of GDP per capita in the world.

The signing of these types of agreements, together with the potential accession of new members (e.g., Panama), contributes to the strengthening and expansion of Mercosur. 

Furthermore, it is expected that the Mercosur-EFTA Agreement - if duly ratified by the parliaments of the corresponding participating countries - will advance a free trade agreement between Mercosur and the European Union.

These developments are undoubtedly significant for Latin America, which is increasingly viewed as a high-potential destination for nearshoring by companies seeking platforms to expand production and access new markets. However, and in order to consolidate as a big global player, it is of utmost importance that Latin American countries persist in their efforts to strengthen the rule of law and combat corruption and drug trafficking -- calamities that constitute real obstacles to the development of any country or region.