Canada, Mercosur Eye Renewed Trade Talks

11 May 2017

Canada and the South American trading bloc Mercosur have recently resumed preparations for potentially negotiating a future trade agreement, officials say, nearly five years after exploratory talks were held between them. 

These efforts were restarted after a technical working meeting was held between Canadian and Mercosur officials in Palacio San Martín of the Argentine Foreign Ministry, according to a press release issued last month. Argentine foreign ministry official Daniel Raimondi commented on the talks, noting the meeting was “highly productive” and that both Mercosur and Canada had expressed interest in moving forward.

The press release reported that delegates exchanged information on their respective positions and negotiating experiences in this field, along with non-tariff barriers, investment and government procurement, and labour and environmental issues. 

New markets

Both sides have been actively working toward taking on new or updated trade negotiating initiatives over the last several months. Canada has an increasingly busy agenda, including planned talks with the US and Mexico to “tweak” the North American Free Trade Agreement (NAFTA).

Ottawa is also looking at next steps for the Trans-Pacific Partnership (TPP), along with discussing a potential trade deal with China, and preparing for the provisional application of the Comprehensive Economic and Trade Agreement (CETA) with the European Union. (See Bridges Weekly, 6 April 2017, 4 May 2017, 9 March 2017, and 6 April 2017

Mercosur members Argentina, Brazil, Paraguay, and Uruguay had a combined GDP of US$2.4 trillion in 2016 and bilateral mechanise trade with Canada totalling nearly US$6 billion. Mercosur also covers a market of 260 million people and is looking to ink its own trade deal and association agreement with the European Union, along with developing deeper ties with other groups such as the Pacific Alliance – which includes Chile, Colombia, Mexico, and Peru.

Canadian Prime Minister Justin Trudeau affirmed Ottawa’s commitment to maintaining a dialogue on deepening trade between Canada and Mercosur during his visit to Argentina last November.

“It is an indisputable fact that trade is good for economic growth and can and should be good for all citizens,” said Trudeau in comments to reporters at the time.

Progress and next steps

In order to help determine Ottawa’s goals in negotiating a possible trade deal with Mercosur, the Canadian government has launched a public consultation inviting the Canadian public, businesses, trade unions, civil society groups, and other interested parties to express their views. The formal notice was posted 28 April and input will be accepted until 29 May.

Agricultural commodities and other resource industries such as lumber are expected to factor into negotiations significantly. Contentious topics between Canada and Brazil could include the aerospace and meat industry: in the case of the former, Brazil filed a request for consultations earlier this year at the WTO regarding alleged Canadian subsidies to Bombardier. The two sides have previously sparred at the global trade body on state aid for this sector. (See Bridges Weekly, 23 February 2017)

Additionally, Argentina lifted their ban on Canadian pork imports during the November meeting between Canadian and Argentine officials, which experts say could create more competition for Brazil pork exports. The Brazilian meatpacking scandal in March of this year could also lead to Canadian beef exports increasing as international buyers shift to other alternative sources, some industry experts say.

Additional meetings are scheduled for the coming months, with negotiators looking to advance a framework for formal negotiations.

ICTSD reporting: “Canada restarts free trade negotiations with South America’s Mercosur trading bloc,” CBCNEWS, 28 April 2017; “Liberals seeking trade deal with powerful Latin American trading bloc,” HERALD NEWS, 28 April 2017; “Trudeau and Argentina’s president say trade - not protectionism - will help the poor, unemployed,” CBCNEWS, 17 November 2017; “Brazil Beef Scandal Leaves Fewer Options for Global Buyers,” REUTERS, 21 March 2017.

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