The government officials, from Canada, Argentina and Brazil, told Reuters they expect 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 that the agreement is 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 are going at a record speed and extremely well, confirming the countries will probably reach a deal this year.

Canadian Prime Minister Mark Carney is expected to visit Brazil in the next quarter, said this source. 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 and the Canadian trade ministry did not immediately respond to requests for comment.

Talks renewed after stall

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.

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

Earlier in March, trade officials from Ontario 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.

‘Trump acceleration’ effect

Fedeli said Ontario was stepping up outreach to South America partly due to what he called the “Trump acceleration” effect, noting that roughly 80 per cent 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. Earlier this month 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.

— Additional reporting by Lucila Sigal in Buenos Aires

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The trade alliance between the EU and South America’s Mercosur, comprising Brazil, Argentina, Paraguay and Uruguay, will substantially boost trade ties in a region that saw commerce with China soar in recent decades while U.S. influence plummeted.

But even as U.S. President Donald Trump’s administration seeks wider regional fealty, South American governments from Brazil to Peru are unlikely to relinquish strengthening ties to China or Europe at a time when they have eclipsed the U.S. in trade in most of the region.

Venezuela raid may have sealed the deal

If anything, several analysts said, Trump’s efforts to flex American power in the region may have helped push past the finish line a trade agreement that suffered numerous delays over two decades of negotiations.

“If credit for this deal goes to anyone, it is to the international context,” said Ignacio Bartesaghi, a foreign policy adviser who has worked with numerous Uruguayan governments over the years. “It goes to Trump’s tariff war, the conflict in Ukraine, to what happened in Venezuela recently.”

Trump’s commando raid to seize Venezuelan President Nicolas Maduro, which set the stage for a more amenable successor government, was the latest of several moves by the U.S. president to sway regional governments.

Last year, Trump threatened to cut off U.S. financial support to Honduras if a conservative candidate did not win the presidential election and conditioned billions of dollars in loans to Argentina on conservatives triumphing in the country’s midterms.

He also used steep tariffs on Brazilian goods to try forcing the country to stop the prosecution of former President Jair Bolsonaro, a staunch Trump ally.

Voters backed Trump’s choice in both elections. But Bolsonaro was later convicted, and the U.S. government dropped most of the new tariffs against Brazilian products soon after.

“The return of America’s pre-eminence in the Western Hemisphere, led by President Trump, is undisputed,” Anna Kelly, a White House spokeswoman, said in a statement. “All of the President’s foreign policy actions have restored American strength after four years of weakness under Joe Biden.”

More deals to come

Trump has repeatedly bashed multilateralism and refused to abide by international rules, withdrawing the U.S. from several global pacts and even telling The New York Times last week that he did not need “international law.”

Few countries in Latin America seem to agree.

While Argentine President Javier Milei, one of Trump’s closest allies in the region, praised the U.S.-backed capture of Maduro, his Foreign Minister Pablo Quirno also celebrated the deal with the EU as a victory for “clear rules and freedom.”

Venezuela was a full Mercosur member until its suspension in 2016 for failing to meet trade and human rights commitments.

One Brazilian official close to the presidency, who asked not to be named to discuss private deliberations, called the EU deal a “breath of fresh air” in “the most shameful and negatively critical week for multilateralism in decades.”

The agreement signed this month may also push Mercosur to conclude other trade agreements with Canada and the United Arab Emirates, said Welber Barral, a former Brazilian trade secretary.

“Countries are seeking to create regional rules that can be obeyed, so they won’t depend on the World Trade Organization, which is being discredited by Trump,” Barral said.

The EU-Mercosur deal is just one more example of several being negotiated and signed by countries that were hit with steep tariffs by the Trump administration, such as Indonesia’s trade accord with the European bloc and a pledge between Japan, South Korea and China to increase regional trade.

The deal between Europe and South America shows that many countries want to reinforce global norms, said Margaret Myers, director of the Asia & Latin America Program at the Inter-American Dialogue.

“At a time when the U.S. is breaking from the status quo, parts of Latin America appear to be upholding it,” she said. “It’s a wake-up call for the U.S.”

— Additional reporting By Luciana Magalhaes in Sao Paulo and Ricardo Brito in Brasilia

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With U.S. President Donald Trump determined to shake up global trade, the European Commission and countries such as Germany and Spain argue the deal will help offset business lost from U.S. tariffs, and reduce reliance on China by securing access to critical minerals.

Opponents led by France, the European Union’s largest agricultural producer, say the agreement will jack up imports of cheap food products, including beef, poultry and sugar, undercutting domestic farmers.

Farmers march, block highways

Farmers have launched protests across the EU, blocking French and Belgian highways and marching in Poland on Friday.

France voted against the deal – but at least 15 countries representing 65 per cent of the bloc’s total population voted in favour, enough for approval, EU sources and diplomats said.

An EU diplomat and Poland’s agriculture minister said that 21 countries supported the agreement, with Austria, France, Hungary, Ireland and Poland against and Belgium abstaining.

German Chancellor Friedrich Merz hailed Friday’s vote as a “milestone” and said the deal would be good for Germany and for Europe.

“But 25 years of negotiations is too long. It’s vital that the next free trade agreements are concluded swiftly,” he said in a statement.

EU capitals have been given until 5 p.m. Brussels time to provide written confirmation of their votes.

This would clear the way for Commission President Ursula von der Leyen to sign the agreement with Mercosur partners – Argentina, Brazil, Paraguay and Uruguay – in Asuncion, possibly next week.

The European Commission concluded negotiationson the deal a year ago. The European Parliament will also need to approve the accord before it can enter force.

France says battle isn’t over

The free trade agreement would be the European Union’s biggest in terms of tariff reduction, removing 4 billion euros (C$6.5 billion) of duties on its exports. The Mercosur countries have high tariffs, such as 35 per cent on car parts, 28 per cent on dairy products and 27 per cent on wines.

The EU and Mercosur will hope to expand evenly split goods trade worth 111 billion euros in 2024. EU exports are dominated by machinery, chemicals and transport equipment, and Mercosur’s are focused on agricultural products, minerals, pulp and paper.

To win over deal sceptics, the European Commission has put in place safeguards that can suspend imports of sensitive farm produce. It has strengthened import controls, notably regarding pesticide residues, established a crisis fund, accelerated support for farmers, and has pledged to cut import duties on fertilisers.

The concessions were not enough to win over Poland or France, but Italy shifted from a ‘no’ in December to a ‘yes’ on Friday.

French opposition parties look to topple government

“It seems to me the balance that has been found is sustainable,” Italian Prime Minister Giorgia Meloni told a press conference.

Mathilde Panot, lower house chief of the far-left France Unbowed party, said on X that France had been “humiliated” by Brussels and on the world stage.

French far-right and far-left parties are set to launch no-confidence motions in the government over the likely approval.

French Agriculture Minister Annie Genevard has said the battle is not over and has pledged to fight for a rejection by the EU assembly, where the vote could be tight. European environmental groups also oppose the accord, saying commodities shipped to Europe will often come from deforested land.

“The simple truth is that this unpopular deal is a disaster for the Amazon rainforest and no progressive MEP that is committed to forest protection should ever support it,” Greenpeace EU campaigner Lis Cunha said.

German Social Democrat Bernd Lange, the chair of parliament’s trade committee, expressed confidence that the deal would be passed, with a final vote most likely in April or May.

— Additional reporting by Charlotte Van Campenhout, Kuba Stezycki and Alan Charlish, Giselda Vagnoni

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Italy and France last month dashed hopes for a December deal, saying they were not ready to support it until farmer fears of an influx of cheap commodities from Mercosur, such as beef and sugar, were resolved.

All 27 EU agriculture ministers have been invited to the meeting at the Commission, the EU presidency holder Cyprus said on Tuesday, although it was not clear yet how many would attend.

Farmers looking for reassurances

European commissioners for agriculture, trade and health are expected to give reassurances over future funding for farmers under the EU’s Common Agricultural Policy, including a 6.3 billion euro (C$10.2 billion) crisis fund in the next EU budget.

The Commission’s move to merge regional cohesion funds and CAP money in the next seven-year budget alarmed farming nations.

In a letter to Cyprus’s president and the head of the European Parliament on Tuesday, Commission President Ursula von der Leyen proposed accelerating 45 billion euros of support to farmers and reiterated that the 2028-2034 budget would guarantee them 293.7 billion euros.

The Commission will also review import controls, including permissible maximum levels of pesticide residues, two EU diplomats said.

“It is a critical moment to discuss demands from farmers,” one of the diplomats said.

Wooing EU members for support

The EU executive, supported by EU-Mercosur proponents such as Germany and Spain, is seeking to garner the broad majority of 15 EU members representing 65 per cent of the EU population required to authorize the EU signature, possibly as early as January 12.

They say the accord, which has been 25 years in the making and would be the EU’s largest in terms of tariff reductions, is vital to boosting exports hit by U.S. import taxes and to reduce reliance on China by securing access to critical minerals.

With Poland and Hungary opposed to the deal and France critical, the position of Italy will be a key determinant of whether the deal can be signed. A vote is expected on Friday.

The Commission had held discussions with member states over the past two weeks and the bloc was on track to sign the agreement soon, a spokesperson for the executive said.

Italy is not opposed to the deal, two Italian sources told Reuters on Tuesday, but wanted assurances – notably on reciprocity – so that imported farm products meet EU health and environmental standards. These were due to be discussed on Wednesday.

A second EU diplomat said Italy was not yet fully on board.

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Some 25 years in the making, a trade pact with Mercosur would be the EU’s largest in terms of tariff cuts.

Germany, Spain and Nordic countries say it will help exports hit by U.S. tariffs and reduce dependence on China by providing access to minerals.

Farmers fear flooded markets

“This trade agreement is the first of many that must come so that Europe gains geo-economic and geopolitical weight at a time when it is being questioned by clear adversaries, such as (Russian President Vladimir) Putin, or even by traditional allies,” Sanchez said.

“If the European Union wants to remain credible in global trade policy, decisions must be made now,” added Merz, in Brussels for a Ukraine-focused summit.

Critics of the pact, however, fear cheap commodities flooding the market to the detriment of European producers.

The summit led to an anti-deal protest by some 7,000 mostly farmers, which turned violent early in the afternoon. Belgian police fired tear gas and water cannons as some protesters hurled potatoes and rocks at police and smashed windows.

Brussels police said they had authorized a protest with 50 tractors, but 1,000 had turned up.

European Commission President Ursula von der Leyen is poised to travel to Brazil to sign the agreement concluded last year with the bloc of Argentina, Brazil, Paraguay and Uruguay.

However, she needs support from EU governments and it is unclear whether there will be the required majority of 15 countries representing 65 per cent of the EU’s population.

Poland and Hungary are opposed and France and Italy are nervous about the impact on farmers from increased imports of beef, sugar, poultry and other products.

‘We are not ready,’ says Macron

France is the EU’s largest agricultural producer.

“As we speak, we are not ready; the numbers do not add up to sign this agreement,” Macron said, adding France had been working with Poland, Belgium, Austria and Ireland to force a postponement.

In France, anger over the government’s handling of lumpy skin disease, a virus affecting cattle, has deepened farmer discontent over issues including the EU-Mercosur deal. Farmers in southwest France have blocked highways for days.

Wary of nationwide farmer protests developing like two years ago, Paris is rushing to vaccinate cattle against lumpy skin disease, while maintaining its opposition to the EU-Mercosur agreement.

EU lawmakers and governments reached a provisional agreement on Wednesday on safeguards designed to cap imports of sensitive farm products, such as beef or sugar, and to soften opposition. The European Commission is also due to issue a declaration committing to ensure aligned production standards.

However, Macron said there needed to be reciprocity, so that the EU did not open up its markets to cheap imports of products not bound by EU regulation such as on the use of pesticides.

Some of the tractors that jammed streets in Brussels’ EU quarter had banners echoing Macron’s skepticism.

“Why import sugar from the other side of the world when we produce the best right here? Stop Mercosur,” read one sign.

— Reporting by Philip Blenkinsop, Inti Landauro, Benoit Van Overstraeten, Louise Breusch Rasmussen; additional reporting Guz Trompiz in Paris.

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European Commission President Ursula von der Leyen had been expected to fly to Brazil at the end of this week to sign the accord, reached a year ago after a quarter-century of talks with the bloc of Argentina, Bolivia, Brazil, Paraguay and Uruguay.

But the dealcan be blocked by a big enough minority of EU members.France and Italy have sought to delay a vote, while Poland opposes the deal.

Italy in spotlight; Brazil warns ‘now or never’

Germany, Spain and Nordic countries say the agreement will help exports hit by U.S. tariffs and reduce dependence on China by providing access to minerals.

But opponents, who have dubbed it a “cars for cows” deal, say cheap commodities could flood the EU, including beef, to the detriment of European farmers.

Lobbying has focussed on Italy. Commission chief von der Leyen and German Chancellor Friedrich Merz met late on Monday with Italian Prime Minister Giorgia Meloni.

“If Italy is not on board, it’s over. I hope today we will see a little clearer,” the head of the European Parliament’s trade committee, Bernd Lange, told Reuters in an interview.

The Polish agriculture minister called on Italy and other nations to join a blocking minority.

Blocking the deal would require opposition of at least four EU nations making up at least 35 per cent of the population.

“We have the numbers, we have the arguments, and we are morally right. Don’t be afraid of blackmail from the automotive industry,” Minister Stefan Krajewski said in a statement.

Diplomats say it is likely that at least one other nation, such as Hungary, will dissent.

Latin American officials are growing impatient, with one Brazilian official warning it was “now or never”, as the bloc is pursuing deals with others such as Japan, India and Canada.

“If the window closes now, it won’t reopen so soon,” another Brazilian source, a diplomat, told Reuters on condition of anonymity.

“Mercosur also has other partners, other obligations,” he said.

EU Parliament tightens safeguards

France has sought to rally a blocking minority to force stronger protections for farmers.

In a concession to Paris in October, the European Commission added a mechanism tosuspend preferential access for some Mercosur farm products, such as beef, poultry and sugar, if imports rise too quickly or if prices fall too suddenly.

The European Parliament voted on Tuesday to make it easier to suspend access, by lowering the thresholds to trigger the mechanism

Parliament will now have to negotiate a compromise with EU governments which had already backed the higher thresholds.

Talks are expected to start as early as Wednesday.

Francesco Torselli, a European lawmaker from Meloni’s party said that although the safeguards were improving the treaty, they were still not sufficient to guarantee farmers could compete on a level playing field.

“We also struggle to understand the rush to approve a measure that has been stalled for years, even though we are convinced that a free trade agreement with the Mercosur region could represent a good opportunity for Europe,” he said.

— Additional reporting by Lisandra Paraguassu in Brasilia; Angelo Amante in Rome and Alan Charlish in Warsaw.

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The federal government announced public consultations on the agreements in a Dec. 13 news release. Consultations close on Jan. 26.

The agreements under negotiation are:

• Canada-India comprehensive economic partnership agreement
• Canada-United Arab Emirates comprehensive economic partnership agreement
• Canada-Thailand free trade agreement
• Canada-Mercosur free trade agreement

India is Canada’s seventh-largest trading partner for goods and services, though that trade relationship has been strained in recent years.

This year, India imposed a 30 per cent tariff on all imports of yellow peas.

The federal government and Canadian exporters have been working to expand trade with the Asia-Pacific region. Thailand was the third-largest economy in that region in 2024, the federal government said.

The Mercosur bloc, which comprises Argentina, Bolivia, Brazil, Paraguay and Uruguay, represented the eighth-largest economy in the world in 2024, the federal government said.

The government specifically asked for comments on issues including:

• Goods for export or import that would benefit from removal of trade barriers
• Import sensitivities
• Non-tariff barriers, technical barriers to trade and sanitary or phytosanitary measures to consider
• Promotion of environmental protections
• Promotion of labour rights or other human rights

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Why it matters: Advancing trade talks with South America would open more doors for Canadian trade

Prime Minister Mark Carney and his team have been locked in talks with U.S. President Donald Trump to hash out a trade deal by Aug. 1, which could help reduce tariffs on Canada.

But his government is also preparing to rely less on a relationship that generated bilateral trade of over C$1 trillion (US$727.33 billion) last year and to focus on diversifying trade by signing free trade pacts globally.

“I had conversations with the foreign minister of Brazil, and there is appetite to carry out conversations around Mercosur,” Minister Maninder Sidhu said in an interview with Reuters.

Brazilian President Luiz Inacio Lula da Silva had said in April that he was interested in advancing talks for a trade deal between South America’s Mercosur bloc and Canada.

Mercosur — which includes Brazil, Argentina, Paraguay and Uruguay — has had negotiation rounds for a trade deal with Canada in the past.

Canada is also keen to continue talks with China to address trade challenges and views a thawing of relations between India and Canada as an important step to support trade, the Minister said.

“With China, there are opportunities, there are challenges,” he said, adding that the countries are holding frank discussions on a path forward on trade tariffs around exports of canola, beef, pet food and many other products.

Canada has 15 free-trade deals covering 51 countries, giving it access to 1.5 billion consumers and Sidhu said that Ottawa will be pursuing more such deals in the coming months without giving a specific target.

He had signed a free trade deal with Ecuador and an investment promotion pact with the UAE in his first two months in office and said discussions are on with the ASEAN countries and also individually with countries in the Indo-Pacific, including Indonesia and the Philippines.

OVER-EXPOSURE

Sidhu said Canadian companies are over-exposed to the U.S. and they are not as competitive as they used to be due to Trump’s tariffs.

“My job is to be out there opening doors,” he said, adding that he would seek to diversify not only trade but Canada’s defense procurements from the U.S.

Carney has promised to increase defense spending by an additional C$9 billion this year to meet NATO’s target of spending two per cent of GDP.

“We are working with the European Union and other partners around the world to help unlock some of those procurement opportunities in defense for our Canadian companies,” he said.

Canadian exports to the U.S. dropped in May to 68 per cent of total exports from a monthly average of 75 per cent last year. The U.S. share in May was the lowest on record as companies pushed to diversify from the U.S.

He did not respond directly on what a trade deal between Canada and the U.S. would look like, but said the government would “work towards a deal that’s best for Canadian businesses and Canadian workers.”

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WHY IT MATTERS: Global trade patterns are shifting amid new U.S. tariff policies

The concerns come ahead of Brazilian President Luiz Inacio Lula da Silva’s official visit to France and the expiry on Thursday of a free trade deal with Ukraine, which is expected to shift to import quotas this summer.

Lula said on Tuesday he would discuss the EU-Mercosur deal with President Emmanuel Macron, a strong critic of the agreement in its current form, which was finalised in December but still needs approval from member states.

In a meeting with members of parliament, French farmers’ groups urged Macron to rally enough partners to form a blocking minority against the Mercosur deal, which they say would be devastating for the beef, poultry and sugar industries and compromise the EU’s ambitions in terms of food sovereignty.

“It would be a real tragedy for our industry,” Alain Carre, head of French sugar industry group AIBS said. “We’re sounding the alarm.”

French farmers held nationwide protests last year over low incomes, rising costs, and competition from cheap imports, particularly from Ukraine and Mercosur countries, demanding fairer trade terms and lighter regulation.

“Our demands (for an EU-Mercosur agreement) are simple: reciprocity of rules, traceability abroad and much clearer labelling,” Jean-Michel Schaeffer, head of French poultry industry group Anvol, said.

Meanwhile, a few hundred farmers protested in Madrid against cheap grain imports from Ukraine and other countries, saying prices have fallen below production costs.

Spanish farmers are likely to lose 1 billion euros ($1.1 billion) this year, said Javier Fatas, a leader of farmers union COAG from the Aragon region in northeastern Spain.

“This happens because of trade deals signed by Spain and the EU as part of geopolitics, bringing us prices too low to sustain our farms,” Fatas said.

He warned that genetically modified grains from Mercosur also created unfair competition, echoing French farmers’ concerns.

Wednesday’s protest was peaceful, but only the beginning, he added. “Bad times are coming.”

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The meeting brought together France and other countries that had expressed reservations on the deal, which was 20 years in the making and deeply divisive in Europe where farmers fear unfair competition on agricultural products such as beef and grains from countries with less stringent environmental rules. 

The office of Minister for Europe Benjamin Haddad said he had defended the idea of including an automatic escape clause on agricultural products in the deal in a video conference with the other EU countries. 

“In the current geopolitical context, all participants agree on how important it is to diversify trade partnerships,” a spokesperson from Haddad’s office told Reuters. 

“However, they can’t accept an unbalanced deal which does not protect their farmers,” the official added. 

The clause, a sort of emergency break to restrict imports, would be triggered in case of a sudden surge in imports that would destabilize certain EU markets. “The deal already includes a general clause but it is too difficult to trigger and would be of no use in case of a crisis,” the official said. 

The meeting is a sign that EU countries which had opposed the deal brokered by the European Commission last year are trying to find a constructive compromise with the EU executive, at a time new markets in Latin America could provide a welcome alternative to the U.S. for European exporters. 

However, the official later said the meeting was not organized in response to U.S. President Donald Trump’s decision to raise tariffs on the EU and other global partners. 

France had received support from the Netherlands, Austria, Ireland, Poland and Hungary among others in its opposition to the deal with the group of South American nations that include farming powerhouses Brazil, Argentina and Uruguay. 

—Reporting by Michel Rose

—Corrects to show meeting was not connected to new U.S. tariffs

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