Brazil Engages in Constructive Dialogue with Canada for Free Trade Agreement

By Lisandra Paraguassu and Lucinda Elliott

BRASILIA/MONTEVIDEO (Reuters) – Brazil is engaged in a “constructive dialogue” with Canada to resume negotiations for a free trade agreement between South America’s Mercosur bloc and Ottawa, according to Brazil’s Foreign Trade Secretary.

Canadian officials are scheduled to visit Brazil in late August, as revealed by Tatiana Prazeres in a written response to Reuters this week.

In the previous month, Canada expressed renewed interest in restarting talks with Mercosur as part of a broader initiative to diversify trade away from the United States due to uncertainty caused by tariffs imposed by U.S. President Donald Trump.

Sources indicate that Canada’s International Trade Minister, Maninder Sidhu, is expected to travel to Brasilia on August 25.

Mercosur, which comprises Brazil, Argentina, Uruguay, and Paraguay, with Bolivia in the process of becoming a full member, is a significant exporter of beef, soybeans, and minerals.

Prazeres stated that Sidhu’s visit “will be an opportunity to assess the conditions for a possible relaunching of negotiations,” although no formal date has been set to restart them. Talks have been on hold since 2021 as South American countries focused on local issues, including elections, prior to the radical shifts in U.S. trade policy under Trump.

Two senior diplomatic sources mentioned that formal negotiations could potentially resume in late September or early October.

Last year, bilateral trade between the U.S. and Canada amounted to $727 billion, whereas Canada’s trade with Brazil – the largest Mercosur economy – reached $9.1 billion, with Brazil achieving a $3.5 billion surplus.

A source familiar with the developments noted that both parties regard the Mercosur-Canada agreement as relatively free of obstacles and anticipate that negotiations could take about a year.

Prazeres stated that any formal restart of negotiations, including the establishment of a timetable for talks, would rely on internal coordination within Mercosur.

“Mercosur is willing to evaluate the next steps,” she expressed.

Uruguay’s Foreign Ministry informed Reuters that “no new steps” had been taken regarding the Mercosur-Canada discussions but confirmed that the agreement remains on the bloc’s agenda.

Argentina’s Foreign Ministry declined to provide comments.