Mercosur and Canada resume free trade agreement negotiations after years of impasse

 What is happening between Mercosur and Canada?

After more than a decade of stalled talks, the Mercosur countries (Argentina, Brazil, Paraguay, and Uruguay) and Canada announced in September 2025 the formal resumption of negotiations for a free trade agreement. The decision was confirmed at a meeting between representatives of the two blocs during the United Nations General Assembly in New York and represents a strategic step toward strengthening economic ties between South and North America.

This move is not just symbolic: it could pave the way for one of the largest trade agreements in the South American region in recent years, with direct impacts on the economies of millions of people—from farmers to small business owners.

Why does this agreement matter?

A free trade agreement between Mercosur and Canada has the potential to eliminate or reduce tariffs on thousands of products, facilitate investment, increase business competitiveness, and generate new job opportunities. For ordinary citizens, this could mean more options for imported products at lower prices, as well as more opportunities for local exporters to sell their goods abroad.

Canada is the 10th-largest economy in the world and one of the United States' main trading partners, with privileged access to the North American market through the United States-Mexico-Canada Agreement (USMCA). Mercosur, on the other hand, has a population of approximately 290 million and is one of the world's largest producers of food, minerals, and energy.

Despite this, trade between the two blocs remains modest. In 2024, trade totaled approximately US$7.2 billion, according to data from the Brazilian Ministry of Foreign Trade. With an agreement in place, experts estimate that this figure could double in less than a decade.

What has held up negotiations in the past?

Negotiations between Mercosur and Canada officially began in 2010 but were halted in 2012 due to political, economic, and bureaucratic disagreements. At the time, the South American bloc countries were facing internal difficulties in aligning their trade policies, while Canada prioritized agreements with the European Union and Pacific Rim countries.

Furthermore, there were concerns about how to protect sensitive economic sectors, such as the Canadian automotive industry and Mercosur's agricultural sector. Each country has distinct interests, and reaching a consensus requires time, patience, and goodwill.

In recent years, however, the landscape has changed. With globalization facing new challenges—such as trade wars, pandemics, and geopolitical tensions—governments around the world have sought more stable and diverse partnerships. In this context, Canada sees Mercosur as an opportunity to reduce its dependence on traditional markets, while South American countries seek to attract foreign investment and modernize their economies.

What can be traded now?

The new rounds of negotiations are expected to address a wide range of topics, including:

Customs tariffs: reduction or elimination of taxes on products such as meat, soybeans, minerals, machinery, technology, and pharmaceuticals.

Rules of origin: clear definition of what counts as a "local product" to ensure the benefits of the agreement.

Digital trade: facilitation of online sales between countries, with data protection and legal certainty.

Sustainability and the environment: commitments to responsible agricultural and industrial practices.

Labor rights: ensuring fair conditions for workers in all sectors involved.

Which sectors can benefit?

Agriculture and Livestock

Mercosur is one of the world's largest exporters of beef, chicken, soybeans, corn, and sugar. With reduced tariffs, these products would gain more market share in the Canadian market, which currently imposes significant barriers to food imports.

Mining and Energy

Canada is a global leader in mining technology and investment in the sector. Brazil and Paraguay, meanwhile, possess vast natural resources, such as iron ore, niobium, and hydroelectric power. An agreement could facilitate partnerships and technology transfer.

Technology and Services

Canadian software, artificial intelligence, and financial services companies could expand their operations in South America. At the same time, Mercosur startups would have easier access to capital and markets abroad.

Industry and Manufacturing

While Canada has a strong industry, especially in sectors such as aerospace and automotive, Mercosur also has competitive niches, such as agricultural machinery and medical equipment. A well-structured agreement could benefit both sides.

And what do consumers gain from this?

For the average consumer, the benefits can be both direct and indirect:

More product variety: Freer trade means access to goods that are currently rare or expensive.

More competitive prices: Lower taxes and more competition tend to reduce costs.

Better-quality jobs: Companies that export tend to pay higher wages and invest more in training.

Innovation: Openness to new technologies and international practices encourages the improvement of local products and services.

Of course, not all sectors benefit equally. Some industries may face increased competition and will need to adapt. Therefore, it is essential that the agreement include transition mechanisms and support for vulnerable sectors.

What will the negotiation schedule be like?

According to a joint statement released by the governments in September 2025, the first technical rounds are expected to take place in the first quarter of 2026. The goal is to conclude negotiations within two years, although experts warn that the process could take longer, depending on the complexity of the issues and internal political alignment.

It's worth remembering that, even after an agreement is reached, it still needs to be ratified by the parliaments of all involved countries—a process that can take months or even years.

What does this mean for the future of global trade?

The resumption of negotiations between Mercosur and Canada is a sign that, despite international tensions, the countries continue to seek economic cooperation. In an increasingly fragmented world, regional agreements like this help keep channels of dialogue open and promote sustainable growth.

Furthermore, the success of this agreement could inspire other partnerships. Mercosur already negotiates with the European Union, South Korea, and Singapore. Canada, meanwhile, has agreements with over 50 countries. An understanding between the two blocs could serve as a model for future global negotiations.

Conclusion: a window of opportunity

The decision to resume negotiations for a free trade agreement between Mercosur and Canada is more than a diplomatic maneuver. It's a bet on the future—on economic growth, job creation, and integration between continents.

For citizens, this means that, in the coming years, we could see concrete changes in what we consume, how we work, and even how our governments view international trade. There's still a long way to go, but the first step has been taken with clarity and purpose.

Now, it's up to governments, businesses, and civil society to closely monitor this process,

 demand transparency, and ensure that the benefits are shared by all—not just a few.