Canada and Mercosur to Sign a Free Trade Deal This Year
Trade Update • May 1, 2026
Key Points
- Canada and Mercosur aim to sign a free trade agreement by the end of the year.
- Negotiations have continued for eight years since launch.
- Canada’s trade with Mercosur reached C$15.8 billion in 2024.
- Canadian exports could face tariff reductions of up to 35% under the deal.
- Talks are driven by efforts to diversify trade relationships.
Canada and the Mercosur bloc are working toward completing a free trade agreement by year-end after eight years of negotiations. A Brazilian official said the process has gained momentum, with both sides aiming to conclude talks as soon as possible. The Government of Canada’s website says a finalized agreement could reduce tariffs on Canadian exports by up to 35% in certain sectors, including machinery, chemicals, and forestry.
According to The Canadian Press, Paula Barboza, director for extra-regional negotiations and economic governance at Brazil’s Ministry of Foreign Affairs, said both sides want to conclude negotiations quickly.
“I think we both have these negotiations as a priority for our governments and we are keen to close them as quick as possible,” Barboza said in an interview.’
Background: Canada–Mercosur Trade Talks
According to the Government of Canada’s website, Mercosur is a South American customs union made up of Argentina, Bolivia, Brazil, Paraguay, and Uruguay. The bloc represents a GDP of over US$3 trillion and a population of about 282 million.
Canada and Mercosur launched free trade agreement negotiations in March 2018, aiming to reach a comprehensive deal covering goods, services, investment, and government procurement. The goal is to improve market access and expand trade between both sides.
In 2024, Canada’s merchandise trade with Mercosur reached C$15.8 billion. Canadian exports were valued at C$3.1 billion, while imports totaled C$12.8 billion. The framework also points to potential tariff reductions on key Canadian exports once an agreement is finalized.
How GHY Can Help?
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By partnering with GHY, your business gains access to the tools and expertise needed to streamline operations and stay competitive in a challenging trade environment.
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