The Finnish Forest industry depends on exports. Key European markets are growing slowly, while global trade is becoming increasingly fragmented. Against this backdrop, the EU’s new and advancing trade agreements are not a peripheral issue for the industry. They go to the heart of competitiveness, market access and risk management.

Free trade agreements will not resolve the forest industry’s cyclical challenges, but they can open up new avenues for growth, diversify risks and strengthen the competitiveness of an export-driven industry in an uncertain world.

Growth is increasingly found outside Europe

Growth prospects for the European forest industry are increasingly shifting towards Asia. AFRY’s World Fibre Outlook up to 2035 covers long-term trends in global pulp and papermaking fibre markets and the key supply and demand drivers shaping the market through to 2035. AFRY estimates that the global market for wood-based products, including packaging materials, paperboard, hygiene products and pulp, will grow by around €175 billion between 2022 and 2035. Growth is being driven particularly by population growth, urbanisation, rising living standards and the expansion of e-commerce, trends that are especially pronounced in Asia and other emerging markets.

Many of the EU’s new free trade agreements and ongoing negotiations are focused precisely on these regions and other markets outside Europe. The interim agreement with the Mercosur countries has been provisionally applied since May 2026, while negotiations on an EU-India free trade agreement were concluded in January 2026. The agreements with Indonesia and Australia are progressing through the finalisation, adoption and ratification stages. The modernised agreement with Mexico further complements the EU’s network of trade agreements. The EU and the Philippines recently announced that they had reached broad agreement on the substance of a free trade agreement, paving the way for negotiations to be concluded in the coming months.

For the forest industry, the practical significance of these agreements stems from several factors. Lower tariffs facilitate market access, common rules improve predictability, and growing demand creates opportunities, particularly for higher value-added products in which the Finnish forest industry has strong expertise.

The Mercosur countries, India, Indonesia, Mexico and Australia are still relatively small markets for the Finnish forest industry. Of the industry’s total exports of €12.5 billion in 2025, the Mercosur countries accounted for around 3 per cent, while each of the other markets accounted for less than 1 per cent. These figures suggest that there is considerable potential for growth, although the development of these markets is not without uncertainty.

The importance of the Mercosur countries is further enhanced by their position as producers of short-fibre pulp, while Mexico and Australia offer opportunities particularly for higher value-added products. From the perspective of the Finnish forest industry, however, the most significant new market potential appears to lie in Asia.

Trade agreements have also become a tool for economic security

Free trade agreements are no silver bullet for the forest industry’s current challenges. Demand in European paper and paperboard markets remains subdued in many areas, competition in global markets is intense, and there is ample capacity in several product categories. This means that companies need to make significant efforts to win new customers. Ultimately, deals are made in the target markets.

Agreements can, however, broaden companies’ options. Access to a wider range of markets means that exports are less dependent on economic developments in individual regions or on changes in the trade policies of traditional trading partners. This helps spread risks and strengthen economic security.

The Mercosur, India, Indonesia, Mexico and Australia processes reflect a broader shift in EU trade policy. Europe is seeking to strengthen its economic security through openness, partnerships and a network of rules-based trade at a time when the global trading system is more fragmented than before.