Canada and South American nations near free-trade agreement with April talks

Panama's President Jose Raul Mulino, from left, Bolivian President Rodrigo Paz, European Council President Antonio Costa, European Commission President Ursula von der Leyen, Paraguay's President Santiago Pena, Argentina's President Javier Milei, Uruguay's President Yamandu Orsi and Brazilian Minister of Foreign Affairs Mauro Vieira, pose for a group photo during a meeting to sign a free trade deal between the European Union and Mercosur in Asuncion, Paraguay, Saturday, Jan. 17, 2026. (AP Photo/Jorge Saenz)

MONTEVIDEO/BRASILIA — Canada and South America’s Mercosur bloc are advancing towards a free-trade agreement that could be signed by the end of the year, with more negotiations scheduled for next month in Brasilia, according to three sources familiar with the talks.

The government officials, from Canada, Argentina and Brazil, told Reuters they expected the deal to be concluded in 2026, with one noting that talks were progressing well and could be wrapped up before September.

The Argentine government official said the agreement was expected to be signed in September or October, marking roughly a year since negotiations formally restarted.

Another diplomat, based in Brazil, also told Reuters negotiations were going at a record speed and extremely well, confirming the countries would probably reach a deal this year.

Trump tariffs have spurred trade diversification

Canada has intensified efforts to diversify trade amid uncertainty linked to tariffs imposed by U.S. President Donald Trump, and South America, especially Brazil, is a trade partner Canada cannot do without, the diplomat in Brazil said.

For Mercosur, a major exporter of beef, soy and minerals, an agreement with Canada would expand access to developed markets and help attract investment in key industries such as mining.

Canadian Prime Minister Mark Carney is expected to visit Brazil in the next quarter, the source in Brazil said. Although neither government plans to announce an agreement during the visit, it may serve as a push to finalize one as soon as possible, the source said.

Mercosur’s office in Montevideo did not immediately respond to requests for comment.

A spokesperson for the Canadian trade ministry said: “Negotiations on a free trade agreement are moving forward with momentum, and we are encouraged by the progress being made. Canada is committed to concluding an ambitious, comprehensive (Mercosur) agreement that creates real opportunities for Canadian businesses, workers, and investors.”

A Canadian government official directly involved in the negotiations told Reuters on Friday the country’s trade minister, Maninder Sidhu, was “very keen” to finalize the deal this year and would meet his Brazilian counterpart on the sidelines of the World Trade Organization meetings in Cameroon on March 28.

Renewed momentum

The renewed momentum follows months of technical exchanges after Canada and Mercosur agreed last year to relaunch the talks that had been stalled since 2021. Mercosur is composed of Argentina, Brazil, Paraguay and Uruguay, with Bolivia expected to become a full member in 2028.

Earlier in March, trade officials from Ontario, a province central to Canada’s economy, visited Argentina and Uruguay as part of efforts to lay the groundwork for a future deal and showcase support for increased bilateral trade.

Ontario’s minister of economic development, job creation and trade, Victor Fedeli, met with technology and mining industry representatives as part of the trip, building on a visit to Brazil late last year.

Fedeli said Ontario was stepping up outreach to South America partly due to what he called the “Trump acceleration” effect, noting that roughly 80% of the province’s trade is with the United States.

“We’re building on that momentum,” Fedeli said in an interview with Reuters 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 added.

The talks with Canada come after Mercosur signed a trade agreement with the European Union in January, following 25 years of negotiations. The European Commission said key trade elements ​of the accord, which ​has proven contentious in Europe, will apply on a provisional basis from ​May 1.

Reporting by Lucinda Elliott in Montevideo, Lisandra Paraguassu in Brasilia; Additional reporting by Lucila Sigal in Buenos Aires and Promit Mukherje in Ottawa; Editing by Cassandra Garrison, Lisa Shumaker and Alison Williams