From Mercosur the possible boost for export 2.0

Cola and Fernet. Since 'Fernandito' became the national drink in Argentina, things have definitely changed for the better for Fratelli Branca Distillerie, with Buenos Aires representing the most interesting market for the Milan-based group.

An exception, however, within a decidedly less rosy picture in that area for our companies. Which today, faced with the potential partial closure of the US market as a consequence of tariffs, look with hope to markets capable of expressing new orders. And in terms of as yet unexpressed potential, the Mercosur area (Brazil+Argentina+Paraguay+Uruguay) is certainly in the top positions. For Italy, the possible free trade agreement that the EU is aiming to close after years of stalemate would be a balm, bearing in mind the disappointing results achieved so far, with export values that have been immobile or almost immobile for ten years. If in 2014 national exports to the Mercosur countries were worth EUR 6.6 billion, we are now down to just 7.5. And the fact that this is an all-time high is actually a meagre consolation, bearing in mind that in the same period, while our sales in the area rose by just 13%, between 2014 and 2024 our overall national exports rose from 399 to 623 billion, a leap of 56%, thus more than four times higher. One third of our direct sales in the region is for machinery and equipment, another billion comes from transport equipment. This is followed by chemicals (718 million) and then pharmaceuticals (644) and foodstuffs (402 million). These figures are limited and potentially developable when tariff and non-tariff barriers are removed, considering the needs of a market of over 250 million inhabitants.

Mercosur is actually mainly Brazil, which in fact almost entirely channels our exports to the area, with 5.8 billion in 2024. Brazil, which only after the snapshot of the first quarter of 2025 manages to enter the top 20 of our outlet markets (it is now 18th), because until last year it was floating in 24th position. No step forward therefore compared to 10 years earlier, bearing in mind that in 2014 Brazil was actually the 18th market, just as it is in this first part of 2025. Italy, however, is still the country's seventh supplier, with a market share of 2.6 per cent of Brazil's purchases.

The situation is worse in the area's other key market, Argentina, which has been penalised for a long time by the continuous devaluation of the exchange rate, a situation that has alienated investors and complicated every business transaction. With sales of just over one billion in 2024, Buenos Aires is our 58th largest market. While Italy is Argentina's eighth largest supplier, with a market share of 2.2%.

If, compared to the Mercosur area, we have a significant trade deficit in the area of paper and foodstuffs (we import more than EUR 2.5 billion for these two categories, exporting less than half a billion), in the machinery sector, on the other hand, there is no match. The 2024 surplus is more than two billion euro, taking into account our exports of 2.5 billion and an import that stops at less than 200 million. The tariffs on machinery fluctuate between 11 and 20 per cent depending on the category, and their reduction could clearly produce additional orders. Federmacchine therefore views the free trade agreement favourably, especially in order to reduce complications with Brazil (e.g. the advance payment required for some taxes), a country that can be a significant outlet for Italian machinery. The hope of the category is that the agreement will also extend to financial instruments, so as to facilitate the activities of companies in terms of payments and credit guarantees. In general, Brazil already offers the most attractive opportunities in the area and Confindustria's Ingenium report, even net of the free trade agreement, sees an unexpressed export potential in machinery alone of over 200 million euros.