Canada is on track to finalize a free-trade agreement with South America’s Mercosur bloc by the end of 2026, with negotiations gaining momentum and a potential signing targeted for September or October, according to government officials from Canada, Argentina, and Brazil.
The talks, which restarted last year after stalling in 2021, have progressed at a rapid pace, with another round of discussions slated for next month in Brasilia. Officials from both sides express confidence in concluding the deal within the year, driven by a shared urgency to diversify trade partnerships. Prime Minister Mark Carney is expected to visit Brazil in the coming quarter, a trip that could accelerate the final push toward an agreement, though no formal announcement is planned during the visit.
For Canada, the pact is a strategic move to reduce reliance on the U.S. market, especially amid tariff uncertainties stemming from policies under President Donald Trump. Roughly 80% of Ontario’s trade flows to the United States, a dependency that has spurred provincial leaders to seek new markets. Ontario’s Minister of Economic Development, Job Creation and Trade, Victor Fedeli, emphasized the need for diversification after meeting with technology and mining industry representatives during a March visit to Argentina and Uruguay, following a similar trip to Brazil last year.
Mercosur, comprising Argentina, Brazil, Paraguay, and Uruguay, with Bolivia set to join as a full member by 2028, stands to gain expanded access to developed markets through the deal. As a major exporter of beef, soy, and minerals, the bloc sees Canada as a gateway to investment in critical industries like mining.
The agreement builds on a broader trend of Mercosur engaging with global partners, following its landmark trade pact with the European Union signed in January after 25 years of negotiations. Key elements of that accord are set to take effect provisionally from May 1. For Canada, securing a deal with Mercosur could unlock billions in trade potential, with bilateral flows already showing growth from Ontario’s outreach efforts alone.
Fedeli underscored the determination behind the push. “The Canadian government is serious about diversifying away from the U.S., working to unlock new opportunities for trade, partnership, and investment,” he said during an interview in Montevideo.
As negotiations head toward a critical phase, the focus remains on aligning technical details before the targeted signing window in late 2026. Current trade volumes between Canada and Mercosur, estimated at over $8 billion annually, could see a substantial boost if the agreement is finalized on schedule.
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