2026 is the year in which the Brazil-Italy-Europe relationship moves up a level, on both sides of the equation. On one side, market access widens: the EU-Mercosur agreement entered provisional application on 1 May. On the other, the rules of entry tighten: Europe's CBAM moved into its full phase in January and the AI Act applies its first penalties from August. In this August edition, the Observatory brings together the developments that matter most to companies and institutions working, or seeking to work, across the three markets.
On 29 April the European Commission approved payment of the ninth and penultimate instalment of the Italian PNRR, 12.8 billion euros, disbursed on 4 June. Italy has now received 166 billion euros (around 85% of the total allocation) and met 416 milestones and targets (73% of those planned). The government calls this phase "l'ultimo miglio", the last mile before the final implementation deadline of 31 August 2026.
The 2026 Budget Act replaced the Transizione 4.0/5.0 tax credits (whose funds ran out in November 2025) with a new Iperammortamento: an uplift of up to 180% in the deductible cost of investments in tangible and digital assets linked to Industry 4.0/5.0, for investments made between 1 January 2026 and 30 September 2028. The GSE platform for advance notifications opened on 12 June 2026.
The 2026 strategic guidelines for internationalisation (MIMIT-MAECI) widen the "new Made in Italy", taking in advanced mechanics, pharmaceuticals, aerospace and transition technologies alongside the traditional pillars (fashion, agri-food, furniture, automotive). On 24 June, Confindustria and minister Adolfo Urso launched the project "Connext Filiere Aerospazio, Difesa e Sicurezza": NATO's target of 3.5% of GDP on defence by 2035 could be worth up to 51 billion euros (+3% of GDP) if the investment is channelled into Italian supply chains.
In an interview with Milano Finanza (17/07/2026), the president of Confindustria, Emanuele Orsini, put a figure on the cost of Italian red tape: 3 years to open a plant in Italy against 6 months in the United States, with €80 billion a year in additional bureaucratic costs. By way of contrast, he pointed to the ZES Única (Special Economic Zone), which with €5.5 billion in incentives produced answers within 60 days, 71,000 jobs and €30 billion in investment. At the Confindustria assembly (26/05/2026), prime minister Giorgia Meloni responded by proposing a "cantiere comune" for regulatory simplification.
The agreement was signed on 17 January 2026 in Asunción. Its trade component (the iTA, Interim Trade Agreement, which falls within the EU's exclusive competence) has been in provisional application since 1 May 2026, following ratification by the four Mercosur countries. The EU will remove tariffs on around 95% of products from the South American bloc; Mercosur on 91% of goods and 85% of the value of European imports, protecting 57 Italian geographical indications.
The Carbon Border Adjustment Mechanism (Reg. EU 2023/956) moved into its definitive phase on 1 January 2026. Importers of cement, iron, steel, aluminium, fertilisers, electricity and hydrogen into the EU must be "authorised CBAM declarants". First purchase of certificates: February 2027. De minimis exemption: 50 tonnes a year.
On that date the transparency obligations (art. 50) come into force, along with the penalty regime (up to 35 million euros or 7% of global turnover) and supervisory powers over general-purpose AI models. The "Digital Omnibus" (a political agreement in May, approved by Parliament in June) postponed only the obligations for high-risk systems, to December 2027 and August 2028, but not the transparency rules.
March 2026 saw the presentation of the "Industrial Accelerator Act", with "Made in EU" and low-carbon requirements in public procurement. The Circular Economy Act is expected during 2026 (target: 24% circular materials by 2030). The CRMA sets benchmarks of 10% extraction, 40% processing and 25% recycling within the EU, with a ceiling of 65% dependence on any single third country for critical raw materials.
Brazil has formalised its National Green Hydrogen Plan (around R$ 18 billion over five years, with a hub at Pecém, Ceará). Italy is pursuing the SouthH2 Corridor (3,300 km, due to operate from 2030). At COP30, Italy, Brazil, Japan and India launched the "Belém 4X" commitment to quadruple biofuels and green hydrogen by 2035, with a MASE-MMA protocol signed in November 2025.
The Italy-Brazil agritech axis is valued at 21 billion US dollars. Italy offers precision technology and machinery; Brazil more than 150 million hectares of arable land. Italian wine in Brazil grew 13.9% by value in 2025 (49.2 million US dollars), making Italy the fifth largest supplier. The Italian bioeconomy is already worth €433.3 billion, the second largest in the EU.
CBAM makes the decarbonisation of Brazilian steelmaking a commercial imperative, not only an environmental one. Recent hydrogen-based green steel partnerships (such as the Brazil-Germany project of February 2026) point to a model that could be replicated with Italy, particularly in water resource management and sustainable mobility.
Free training for SMEs on the operational impact of the EU-Mercosur agreement, focused on practical tools for exporters.
"Brazil's great challenge, and Mato Grosso's in particular, is to stop exporting only the raw product and start processing it here. And for that it needs technology and more affordable machinery."
"When you take tariffs to zero on both sides, you expand trade. Europeans sell more here and Brazil sells more there. Everyone wins."
A Convention Bureau Italia roadshow dedicated to the Brazilian market, in São Paulo.
Buenos Aires, São Paulo and Brasília. See the opportunity radar for details.
Focused on energy, sustainable infrastructure and green hydrogen at the Port of Pecém.
The European regulatory framework of 2026, with CBAM in its full phase, the AI Act carrying penalties from August, and an EU-Mercosur agreement in application but still subject to legal challenge, redefines both the conditions of access and the requirements for operating between Brazil, Italy and Europe. The bilateral opportunities are real and growing, from sustainable fuels to agri-food. But they turn into concrete cooperation only where there is technical, regulatory and institutional preparation. That is precisely the space the PAS occupies.