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

Canada and MERCOSUR are negotiating a comprehensive free trade agreement (FTA).

• Mercosur includes Argentina, Brazil, Paraguay and Uruguay, representing a collective Gross Domestic Product of CAD$3.2 trillion, and a population of 261 million; expanding Canada's trade with markets such as Mercosur is a priority for the Government of Canada.
• An ambitious, comprehensive and inclusive FTA will serve to diversify our markets by creating new opportunities and providing transparency and predictability for Canadian exporters and investors.
• A Canada-Mercosur FTA has the potential of offering Canadian exporters, investors and services suppliers the competitive advantage of preferential access to a highly protected market.
• Seven rounds of negotiations have taken place to date and the planned eighth round was postponed due to the COVID-19 pandemic; however, in the meantime, Canada and Mercosur are engaging virtually in order to advance the negotiations.
• During the current forest fire season in South America, we continue to seek ways to work closely with Brazil, as one of the main custodians of the Amazon rainforest, on environmental protection and climate change, including through this FTA.

Mercosur is a customs union and a trading bloc established by Argentina, Brazil, Paraguay and Uruguay in 1991. On March 9, 2018, Canada and Mercosur launched FTA negotiations, with a view to negotiating a comprehensive and inclusive FTA, containing ambitious market access commitments across goods, services, investment and government procurement. The latest (seventh) round of negotiations was held in Ottawa at the end of July 2019. An FTA with Mercosur would grant a competitive advantage to Canadian companies in a highly protected market, and could also lead to increased and more predictable market access for Canadian service providers. Round 8 was postponed on two occasions: first due to elections in Canada, Uruguay and Argentina in late 2019 and second, due to concerns related to COVID-19 in March 2020. Round 8 has not yet been rescheduled; however, virtual engagement is taking place intersessionally in order to advance work.
Mercosur has prioritized its engagement with Canada, while it is also engaged in talks with Korea, Singapore and Lebanon, among others. The EU-Mercosur FTA was finalized in June 2019, and negotiations with the European Free Trade Association (Iceland, Liechtenstein, Norway, Switzerland) concluded in August 2019. Negative political reactions in France, Ireland and Austria could delay efforts to ratify the EU-Mercosur deal. The recent forest fires, in particular, have raised concerns within the EU (particularly France) on the implications of implementing an FTA with Mercosur. In Canada, Greenpeace is calling for a letter-writing campaign asking Minister Champagne to stop FTA negotiations with Mercosur because of the Amazon fires. Canada is seeking an ambitious, comprehensive and enforceable Environment Chapter in the FTA, focused on maintaining high levels of environmental protection and ensuring robust environmental governance.

Canada- Brazil WTO Dispute (Aircraft)
For more information, please consult QP Note #00203-2017 "Bombardier WTO dispute against Canada concerning trade in commercial aircraft"

Political Situation in Brazil
For information, please consult QP Note #00100-2017 "Political Upheaval in Brazil".

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