Regulatory Governance of Chemical Substances in the Context of the EU-Mercosur Agreement: Challenges and Opportunities for Brazil

doi:10.22167/2675-6528-202603038

October 07, 2026

Regulatory Governance of Chemical Substances in the Context of the EU-Mercosur Agreement: Challenges and Opportunities for Brazil

Regulatory Governance of Chemical Substances in the Context of the EU-Mercosur Agreement: Challenges and Opportunities for Brazil

Jiang Kai; Daniel Bruno Vasconcelos

DOI: 10.22167/2675-6528-202603038

Article derived from a Final Course Work (TCC), with content based on the student’s original work and adapted to the editorial format of the E&S Magazine with the support of the ResumeAI tool, an artificial intelligence solution developed by the Pecege Institute for textual synthesis and organization.

Abstract

The regulatory governance of chemical substances has undergone profound transformations, driven by the European REACH model and the growing relevance of the ESG (Environmental, Social, and Governance) agenda. The impacts of the implementation of Law No. 15.022/2024 (Brazil REACH) and the dynamics of the EU-Mercosur Association Agreement on the competitiveness of the Brazilian chemical industry were analyzed. The research adopted a qualitative approach, based on documentary analysis and a semi-structured interview with an industry expert. The results showed that, although Brazil REACH represents an advance in regulatory convergence with international standards, its effectiveness was limited by gaps in institutional capacity and by the operational uncertainty of regulatory agencies. It was found that recent political uncertainties and debates in the European Parliament increased perceived risk, but did not interrupt the industrial adaptation process, which occurred proactively to meet the demands for access to global markets and sustainable financing. It was observed that regulatory compliance for chemical substances has come to be perceived not only as a cost center, but as a strategic governance asset, essential for the resilience of companies in global value chains.

Keywords: Technical barriers to trade; Institutional capacity; Regulatory convergence; Socio-environmental governance; Chemical substance regulation.

1. Introduction

The global chemical industry is experiencing a paradigm shift, driven by the need to harmonize economic development with chemical safety and environmental preservation. In this context, the European Union’s REACH Regulation (Registration, Evaluation, Authorisation and Restriction of Chemicals), established by Regulation (EC) No 1907/2006, has emerged as a governance model. Since its implementation, REACH has consolidated the principle of the burden of proof, transferring to industry the onus of demonstrating the safety of substances for use (EUROPEAN PARLIAMENT AND COUNCIL, 2006).

In Brazil, the regulation of chemical substances has historically been fragmented and focused on specific sectors. However, the enactment of Law No. 15.022/2024, known as “Brazil REACH”, represents a qualitative advancement. This legislation formalizes the Brazilian convergence to international chemical safety standards, aiming at the creation of the National Chemical Substances Inventory and the risk management of priority substances. Regulatory compliance, in this context, transcends mere obligation, becoming an imperative of socio-environmental governance and a facilitator of market access.

The urgency of this topic is accentuated by the negotiations for the Association Agreement between the European Union and Mercosur. Although the agreement aims to reduce tariffs and foster bilateral trade, it imposes rigorous requirements regarding European health and safety standards (POLICY.TRADE EUROPEAN COMMISSION, 2025). With full implementation and final adjustments foreseen for 2026, Brazilian industry faces the challenge of adapting its production processes and information flows so that technical requirements do not become insurmountable trade barriers.

In this scenario, the concept of environmental Compliance is integrated into the ESG (Environmental, Social, and Governance) agenda. Compliance with Brazil REACH and anticipation of the European model’s requirements allow organizations not only to mitigate legal risks but also to generate shared value (PORTER; KRAMER, 2011). Transparency in the supply chain and monitoring of substances of high concern (SVHCs) become strategic assets for companies seeking sustainable financing and acceptance in high value-added markets (SILVA; SOUZA, 2022).

However, the scenario is complex due to procedural discussions and challenges in the European Parliament, which introduce a layer of political uncertainty regarding the agreement with Mercosur. This volatility demands a strategic and proactive vision from Brazilian companies. Given this context, the present study is justified by the need to analyze the challenges and opportunities of regulatory governance of chemical substances in Brazil, considering the impact of Law No. 15.022/2024 and the scenario of trade integration with the European Union, in order to understand how regulatory compliance can become an asset for competitiveness and socio-environmental governance. Thus, the general objective of this study is to analyze the challenges and opportunities of regulatory governance of chemical substances in Brazil, considering the impact of Law No. 15.022/2024 and the scenario of trade integration with the European Union, in order to understand how regulatory compliance can become an asset for competitiveness and socio-environmental governance.

2. Material and Methods

This study adopted a qualitative methodological approach of an applied nature, based on the precepts of exploratory and analytical research. The choice of this approach was justified by the need to examine the regulatory governance of chemical substances in the dynamic scenario of the Association Agreement between the European Union and Mercosur. The objective was to integrate the normative framework into the professional practice of the sector, according to the perspective of Silva and Souza (2022), and to apply the acquired knowledge of Compliance and ESG.

The research was developed in two integrated stages for data collection and processing. In the first phase, an exhaustive documentary and bibliographic survey was carried out. Official documents were analyzed, including Regulation REACH (EC) No 1907/2006, Law No 15.022/2024 (Brazil REACH), and progress reports from the EU-Mercosur Agreement, issued by the European Commission and Itamaraty.

This documentary stage allowed for the construction of four fundamental analytical categories that guided the study. The categories were: (i) REACH as a paradigm of global regulatory convergence; (ii) chemical substances as technical barriers to trade; (iii) institutional capacity for the implementation of Brazil REACH; and (iv) strategic opportunities within the scope of the ESG agenda. These categories served as the basis for the development of the interview guide and the subsequent data analysis.

In the second phase, primary data was collected through a semi-structured interview. The selected participant was a managerial-level professional from the chemical-pharmaceutical sector, based in the city of São Paulo, SP. The selection was based on their experience of over ten years in regulatory compliance management in international markets, covering Latin America and Europe.

The semi-structured interview lasted 45 minutes and was conducted via a remote platform. The participant, a senior regulatory compliance manager, had extensive experience in the regulatory interface between Latin America and Europe, with a background in leading health and environmental dossiers. This expertise ensured the technical mastery necessary for an in-depth discussion of the research problem.

In observance of ethical considerations, the participant’s free and informed consent was formalized. The anonymity of the institution and the interviewee was preserved, in accordance with the ethical guidelines of USP/Esalq. The data collected focused exclusively on the professional strategic perception of regulatory and compliance processes, without involving risks to the environment or animal experimentation.

For the treatment of the empirical material, Thematic Content Analysis was employed, as proposed by Bardin (2011). This technique was structured in three distinct phases: pre-analysis, which consisted of a floating reading of the material; material exploration, through coding; and results treatment, which involved thematic categorization and inference. The interview findings were systematically confronted with the theoretical framework and legal texts analyzed in the first stage.

Data triangulation, which united documentary data (the letter of the law), bibliography (academic debate), and interviews (market practice), allowed for the construction of an interpretive synthesis. This approach sought to provide a critical view on the challenges of socio-environmental governance and the effectiveness of compliance standards in the face of international technical barriers, aligning with the study’s general objective.

It should be noted, as a methodological limitation, that conducting a single in-depth interview does not allow for statistical generalizations to the entirety of the Brazilian chemical industry. The findings reflect qualitative perceptions of a specific context and should be interpreted as exploratory hypotheses. However, the high degree of specialization of the interviewee and the applied nature of the research provided robustness to the data in answering the specific objectives of the work.

3. Results and Discussion

The data analysis, based on a semi-structured interview with a specialist in the chemical-pharmaceutical sector and a documentary review, revealed crucial insights into the regulatory governance of chemical substances in Brazil, especially in the context of Law No. 15.022/2024 and the EU-Mercosur Agreement. The results were organized into four main thematic axes, which allowed for a confrontation between the perceptions of regulatory and business practice and the theoretical framework. These axes addressed the REACH Regulation as a global paradigm, the function of chemical substances as technical barriers to trade, institutional capacity for the implementation of Brazil REACH, and regulatory governance as a strategic asset within the ESG scope.

The findings indicate that, although Brazil REACH represents a significant advance in regulatory convergence, its effectiveness is conditioned by institutional gaps and operational uncertainties. The industry, in turn, has demonstrated proactive adaptation, perceiving regulatory compliance not only as a cost but as a strategic element for access to global markets and sustainable financing. This multidimensional perspective is essential for understanding the complexity of Brazilian insertion into global value chains, where regulation becomes a pillar of competitiveness and socio-environmental governance.

REACH as a paradigm: between global reference and local capacity

The perception of the interviewed expert confirmed the relevance of the European Union’s REACH Regulation as a paradigmatic model for the international regulatory governance of chemical substances. The interviewee emphasized that the “no data, no market” principle, central to REACH, transformed the logic of innovation in the industry, requiring companies to proactively anticipate and manage the risks associated with substances, rather than merely reacting to crises. This shift in approach is in line with the literature that highlights REACH as a milestone in internalizing the responsibility for chemical risk throughout the entire production chain (EUROPEAN PARLIAMENT AND COUNCIL, 2006).

However, empirical research revealed that normative convergence does not manifest homogeneously, evidencing structural limits for the integral replication of the European model in Mercosur countries, including Brazil. The expert pointed out that the complexity of the dossiers required by Europe demands a laboratory capillarity and technical expertise that are still under construction in Brazil. This observation suggests that the adoption of REACH principles in developing jurisdictions tends to occur adaptively, incorporating the model’s foundations but adjusting them to local institutional capacity (OECD, 2021).

This functional adaptation of regulatory convergence, rather than integral replication, reflects the structural asymmetries existing between different jurisdictions. The transposition of a complex regulatory model like REACH to a context with distinct infrastructure and resources is not a linear process of normative diffusion. On the contrary, it is a mechanism conditioned by political and economic factors that shape the effectiveness of harmonization initiatives, such as Brazil REACH, and influence the productive sector’s response capacity.

Despite the limitations, the influence of REACH is undeniable, driving the reformulation of national legislations in several countries, including Brazil with Law nº 15.022/2024. This convergence, although adaptive, is seen as a necessity for commercial survival in a globalized market, where regulatory fragmentation increases transaction costs. Normative alignment, therefore, seeks to reduce asymmetries and facilitate the acceptance of Brazilian products in supply chains that require total transparency about the chemical composition of inputs, even if full equivalence remains a challenge.

Chemical substances as technical barriers to trade

The analysis of the impact of the EU-Mercosur Agreement, from the specialist’s perspective, revealed that the regulatory costs associated with chemical compliance may, in practice, outweigh the expected tariff benefits of trade liberalization. The statement that “there is no point in eliminating import duties if the product cannot enter the port of Rotterdam due to a lack of a REACH registration number or because it contains a restricted SVHC” illustrates the centrality of technical barriers over tariff barriers in the trade of chemical products.

This perception unfolds into three main dimensions of non-tariff costs. The first, of a scientific nature, refers to the need for product reformulation to meet European restrictions, which requires investments in research and development. The second dimension is financial, associated with the high costs of laboratory tests and the generation of robust toxicological data, essential for proving the safety of substances. Finally, the bureaucratic dimension arises from the simultaneous management of multiple regulatory systems, such as the European REACH and the future Brazil REACH, creating significant operational complexity for companies.

These elements demonstrate that the regulation of chemical substances, although legitimate in its objectives of protecting health and the environment, functions in practice as a relevant technical barrier to international trade. The absence of mutual recognition mechanisms between trade blocs exacerbates this situation, transforming technical requirements into obstacles that can limit the access of Brazilian products to the European market (OECD, 2021). For the chemical sector, regulatory harmonization is, therefore, a double-edged sword: while compliance with standards eliminates long-term obstacles, the immediate cost of compliance can exclude smaller companies from bilateral trade.

The sustainability of trade between the EU and Mercosur, regarding the chemical sector, intrinsically depends on Brazil’s capacity to develop quality infrastructure, including accredited laboratories and interoperable databases, that can support European demands. The EU-Mercosur Agreement presupposes respect for high safety standards, but its practical implementation requires a continuous effort of “regulatory cooperation” to mitigate the risk of chemical regulations becoming instruments of disguised protectionism, directly impacting the competitiveness of Brazilian industry.

Brazil REACH and the challenge of institutional capacity

The implementation of Law No. 15.022/2024, the “Brazil REACH”, was identified as a critical point in Brazilian regulatory governance. Although the legislation is recognized as an essential normative advancement for convergence with international standards, the predominant perception in the sector is one of uncertainty regarding its effective operationalization. The interviewee’s concern, expressed in the question “we know what to register, but we don’t know who will evaluate it, with what depth, and in how much time”, highlights the lack of clarity on the implementation mechanisms.

This evidence points to the centrality of institutional capacity as a determining factor for the effectiveness of regulation. The absence of a structure equivalent to the European Chemicals Agency (ECHA), which in Europe centralizes the registration, evaluation, and authorization of substances, generates significant uncertainties regarding regulatory predictability and the processing times for registrations in Brazil. The environmental compliance literature emphasizes that regulatory effectiveness depends not only on the quality of legislation but also on the implementation and enforcement capacity of regulatory agencies (SILVA; SOUZA, 2022).

Without robust and transparent institutional support, there is a risk that Brazil REACH will create a regulatory system that imposes significant costs on industry without generating the expected benefits in terms of chemical safety and market predictability. The lack of a consolidated regulatory infrastructure may compromise not only the effectiveness of the standard in protecting health and the environment, but also its function of promoting legal certainty and competitiveness for Brazilian companies in the international arena. The credibility of the national regulatory system, therefore, is intrinsically linked to its implementation capacity.

The operational asymmetry between the European model, with almost two decades of consolidation of databases and laboratory networks, and the Brazil REACH, which adopts interministerial governance and is in the initial phase of structuring the National Inventory of Chemical Substances (INSQ), conditions the pace of regulatory convergence. This structural difference imposes additional challenges on Brazilian industry, which needs to adapt to a scenario of uncertainty while seeking to meet the demands of more mature and regulated markets. Overcoming these challenges requires continuous investments in infrastructure, technical training, and interinstitutional coordination.

Regulatory governance as an ESG asset: business strategy in a context of uncertainty

The empirical analysis revealed that Brazilian companies are adopting adaptive and proactive strategies in the face of political and regulatory uncertainty, especially regarding the procedural debates and challenges surrounding the EU-Mercosur Agreement in the European Parliament. The interviewee’s perception that “political risk is volatile; technical requirement is structural” and that “the company has not halted any investment in compliance due to the suspension of the agreement” demonstrates a prioritization of technical and structural adaptation over short-term political fluctuations.

This stance suggests that chemical compliance has been internalized as a fundamental component of corporate regulatory governance, directly associated with the Governance (G) dimension of the ESG framework. Preparation for Brazil REACH and adherence to international standards are no longer seen merely as legal obligations to be met, but as strategic instruments for risk mitigation, access to high-value markets, and strengthening corporate reputation. Supply chain transparency and the monitoring of substances of high concern (SVHCs) become strategic assets for companies seeking sustainable financing and acceptance in demanding markets (SILVA; SOUZA, 2022).

This positioning converges with the perspective of shared value creation, in which regulatory compliance can act as a vector for innovation and competitiveness (PORTER; KRAMER, 2011). In the analyzed context, regulation transcends the function of an external restriction variable, integrating itself into the core of corporate strategy and redefining the relationship between compliance and competitive advantage. Companies that anticipate regulatory trends, such as the banning of certain substances or the requirement for new tests, demonstrate superior operational resilience and attract investments that use environmental compliance as an indicator of long-term risk and performance.

Therefore, effective regulatory governance, when accompanied by predictability and institutional capacity, can act as a powerful vector for value creation, not just an operational cost. The consolidation of Brazil REACH represents not only a regulatory advance but also a test of the Brazilian State’s capacity to structure effective regulatory governance capable of sustaining the country’s insertion into complex trade agreements and global value chains. Regulatory compliance, in this scenario, is a pillar for building institutional credibility and for the competitiveness of the Brazilian chemical industry.

In summary, the results of this research demonstrate that the REACH Regulation serves as a global paradigm, driving regulatory convergence in Brazil, albeit adaptively due to institutional limitations. Chemical substance regulations act as significant technical barriers to trade, often outweighing the tariff benefits of agreements such as the EU-Mercosur. Brazil’s institutional capacity for REACH implementation is a critical factor, generating operational uncertainties. However, the industry has responded proactively, perceiving regulatory compliance as a strategic asset for ESG governance, essential for competitiveness and resilience in global value chains, transforming conformity into a pillar of shared value and institutional credibility.