The Argentine Textile Industry Federation (FITA), the Brazilian Textile and Apparel Industry Association (ABIT), and Euratex have intensified their collaborative monitoring of the Mercosur-European Union Partnership Agreement as it enters a critical legal phase in early 2026. While the agreement was officially signed on January 17, 2026, the European Parliament has recently referred the pact to the Court of Justice of the European Union (CJEU) for a compatibility assessment. This referral introduces a potential 18-month delay in full ratification; however, industry leaders are advocating for the ‘Interim Trade Agreement’ (iTA) to be provisionally applied by March 2026. This maneuver would allow immediate tariff reductions on textiles and apparel, which currently face duties as high as 35 per cent in Mercosur markets.
Market liberalization and competitive rebalancing
The agreement is projected to save European firms approximately €4 billion annually in customs duties, with a significant portion of these gains concentrated in the clothing and machinery sectors. For Mercosur, the pact facilitates ‘proximity-neutral’ sourcing, allowing European brands to access Brazil’s cotton - which accounts for 12 per cent of global output - under preferential terms. This integration is designed to reduce the apparel sector's reliance on volatile Asian logistics corridors. Despite the clear economic incentives, challenges persist: domestic industrialists in South America fear a deepening dependence on raw material exports, while European manufacturers face the implementation of the Digital Product Passport in late 2026, adding a layer of administrative compliance to the new trade framework.
Sustainability and labor alignment
A central pillar of the 2026 roadmap is the ‘Trade and Sustainable Development’ chapter, which mandates adherence to the Paris Agreement and core ILO labor standards. This alignment is critical for global apparel brands prioritizing supply chain traceability. While environmental groups express concerns over potential deforestation, the agreement includes a standstill clause and safeguard mechanisms to prevent market disturbances. Industry analysts suggest that if the CJEU provides a favorable opinion, the combined trade zone of 780 million consumers will become the world’s largest free-trade area, fundamentally restructuring global sourcing patterns for natural fibers and technical textiles.
FITA, ABIT, and EURATEX represent a combined textile workforce of over 3 million people across Europe and South America. These organizations focus on harmonizing trade rules and sustainability standards between the two blocs. Their 2026 growth plan prioritizes duty-free market access and technological cooperation to ensure regional competitiveness against rising global trade protectionism.
