Canada, South American Trade Bloc Eye Deal by Year’s End

Canada and the Mercosur trade bloc are making rapid progress toward a free-trade agreement that could be finalized by late 2024. Negotiations are set to resume next month in Brazil, with officials citing Canada's push to reduce trade dependence on the United States.

Canada and South America’s Mercosur trading alliance are making significant strides toward completing a comprehensive free-trade deal that could be finalized before the year ends, with fresh negotiations planned for next month in Brazil’s capital.

Three government sources from Canada, Argentina, and Brazil informed Reuters that they anticipate the agreement will be completed by 2024, with one official suggesting talks are moving so smoothly they could conclude before September arrives.

An Argentine government representative indicated the pact is likely to be formally signed during September or October, which would mark approximately one year since formal negotiations resumed.

A Brazilian-based diplomat also confirmed to Reuters that discussions are proceeding at unprecedented speed and with exceptional success, reinforcing expectations that the nations will likely finalize a deal within this calendar year.

The source mentioned that Canadian Prime Minister Mark Carney is anticipated to travel to Brazil during the upcoming quarter. While neither nation intends to announce an agreement during this visit, it could provide additional momentum to complete negotiations as quickly as possible.

Officials from Mercosur’s Montevideo headquarters and Canada’s trade ministry did not provide immediate responses when contacted for comment.

This renewed progress comes after months of technical discussions following Canada and Mercosur’s decision last year to restart negotiations that had been dormant since 2021. The Mercosur bloc includes Argentina, Brazil, Paraguay, and Uruguay, with Bolivia set to join as a full member in 2028.

Canada has ramped up efforts to broaden its trade relationships amid uncertainty surrounding tariffs implemented by U.S. President Donald Trump, with sources noting that South America, particularly Brazil, represents an essential trading partner for Canada. For Mercosur nations, which are major exporters of beef, soybeans, and minerals, a Canadian agreement would provide expanded access to developed markets and help draw investment in crucial sectors like mining.

In early March, trade representatives from Ontario, a province vital to Canada’s economic framework, traveled to Argentina and Uruguay to establish foundations for a potential agreement and demonstrate support for enhanced bilateral commerce. Ontario’s Minister of Economic Development, Job Creation and Trade, Victor Fedeli, engaged with technology and mining sector leaders during the trip, building upon a Brazil visit from late last year.

Fedeli explained that Ontario was increasing its South American outreach partly because of what he termed the “Trump acceleration” effect, highlighting that approximately 80% of the province’s trade involves the United States.

“We’re building on that momentum,” Fedeli stated during a Reuters interview in Montevideo. “The Canadian government is serious about diversifying away from the U.S., working to unlock new opportunities for trade, partnership, and investment,” he continued.

These Canadian discussions follow Mercosur’s completion of a trade agreement with the European Union in January, after 25 years of negotiations. Earlier this month, the European Commission announced that essential trade components of the accord, which has generated controversy in Europe, will take provisional effect starting May 1.