Question Period Note: Canada-MERCOSUR Free Trade Agreement (FTA) Negotiations

Canada and Mercosur members are exploring possible resumptions of free trade agreement negotiations, which have been on hold since 2020.

• The Mercosur bloc, composed of Argentina, Bolivia, Brazil, Paraguay, and Uruguay, represents a collective real Gross Domestic Product of nearly US$3.0 trillion in 2024, and a combined population of 282 million; expanding Canada's trade with markets such as Mercosur is a priority
• An ambitious, comprehensive, and inclusive FTA with Mercosur would be a key element of Canada's trade diversification agenda, expanding export markets and offering new opportunities for Canadian exporters and investors.
• A Canada-Mercosur FTA could offer Canadian exporters, investors, and services suppliers preferential access to a highly protected market. This would ensure Canadian businesses have a level playing field with their competitors from other Mercosur FTA partners.
• Negotiations with Mercosur have remained on hold since 2020, with heavily subscribed trade agendas for both sides prioritizing other initiatives. Officials are now exploring the parameters for a resumption of negotiations.
• We will continue to seek ways to work closely with Brazil--one of the main custodians of the Amazon rainforest--on environmental protection and climate change, including through a potential FTA.

The South American Common Market (Mercosur) is a trading bloc and customs union consisting of Argentina, Bolivia, Brazil, Paraguay and Uruguay. In 2024, Canada's merchandise trade with Mercosur totaled CA$15.8 billion, with Canada's exports valued at CA$3.1 billion and imports valued at CA$12.8 billion. Canada and Mercosur launched FTA negotiations in March 2018, with a view to negotiate a comprehensive and inclusive FTA containing ambitious market access commitments across goods, services, investment, and government procurement. Seven rounds of negotiations were held, with the most recent taking place in Ottawa in August 2019 with no other rounds scheduled. Brazil is Mercosur's permanent coordinator for FTA negotiations with Canada (note: Bolivia, currently undergoing implementation of the group's internal rules until 2028, is not party to the FTA negotiations).

An FTA with Mercosur would be an important opportunity to advance Canada's trade diversification agenda by securing preferential access to Mercosur's highly protected market and gain a first mover advantage over key competitors, including the US. A resumption of negotiations would provide an opportunity for Canada to reinforce the importance of a rules-based trading system at a time of growing protectionism and uncertainty.

Non-Governmental Organizations (NGOs) have raised concerns on the potential environmental impacts of the FTA, with a particular focus on deforestation of the Amazon rainforest and the negative impact on local indigenous communities. Canada will continue to raise its concerns with Mercosur members on broader environmental and Indigenous rights issues and will continue to keep Canadian stakeholders and Indigenous representatives informed.

None