Canada and South America’s Mercosur trading bloc have moved closer to finalizing a free-trade agreement, with officials and diplomats saying the deal could be signed by the end of the year. According to three sources familiar with the discussions, negotiators have scheduled another round of talks next month in Brasilia as momentum builds after talks resumed last year.
Government officials from Canada, Argentina and Brazil said they expect the agreement to be concluded in 2026, while one source noted negotiations were progressing well and could be wrapped up before September. An Argentine government official indicated a signature could come in September or October, roughly a year after the formal restart of negotiations.
Another diplomat based in Brazil described the pace as unusually fast, saying talks were moving at a record speed and that the countries will probably reach a deal this year. A separate source said Canadian Prime Minister Mark Carney is expected to visit Brazil in the next quarter. While neither government plans to announce an agreement during that visit, the trip could serve as a catalyst to accelerate finalization.
Mercosur’s office in Montevideo and the Canadian trade ministry did not immediately respond to requests for comment.
The recent surge in activity follows months of technical exchanges after Canada and Mercosur agreed last year to relaunch negotiations that had been stalled since 2021. Mercosur comprises Argentina, Brazil, Paraguay and Uruguay, with Bolivia expected to become a full member in 2028.
One source said Canada has intensified efforts to diversify its trade relationships amid uncertainty linked to tariffs imposed by U.S. President Donald Trump. The same source added that South America, and Brazil in particular, is a trade partner Canada cannot do without.
For Mercosur, which is a major exporter of beef, soy and minerals, a pact with Canada would broaden access to developed markets and could help draw investment into key industries such as mining. Officials and industry interlocutors have emphasized the potential for improved market access and investment flows as central benefits of a concluded agreement.
Provincial outreach has already begun to lay groundwork for deeper ties. Earlier in March, trade officials from Ontario, a province central to Canada’s economy, visited Argentina and Uruguay to prepare for a potential deal and to demonstrate provincial support for expanded bilateral trade. Ontario’s Minister of Economic Development, Job Creation and Trade, Victor Fedeli, held meetings with representatives from the technology and mining sectors during the trip, building on a visit to Brazil late last year.
“We’re building on that momentum,” Fedeli said in an interview 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 shortly after Mercosur signed a trade agreement with the European Union in January, capping 25 years of negotiations. Earlier this month, the European Commission said key trade elements of that accord will apply on a provisional basis from May 1.
Officials and diplomats involved in the current negotiations underline both the speed of recent progress and the continued technical work required to finalize terms acceptable to all parties. The combination of national and subnational outreach, along with scheduled negotiating rounds in Brasilia, suggests an intensified push to conclude the deal within the timelines cited by sources.
Observers inside the negotiating process note that the agreement’s potential impacts are concentrated in sectors where Mercosur has strong export profiles and where Canadian provinces see opportunity, including agriculture, mining and technology-related trade and investment.