After two decades, Mercosur is finally looking beyond South America

The South American bloc Mercosur — made up of Argentina, Brazil, Uruguay, and Paraguay — is going through an unprecedented opening to trade. Paradoxically, that’s largely thanks to cooperation between Javier Milei and Luiz Inácio Lula da Silva, two governments at opposite ends of the ideological spectrum.

For most of its existence, Mercosur avoided seeking new trading partners outside South America. The bloc’s last free trade agreements (FTAs) were signed back in 2007 and 2010, with Israel and Egypt, respectively.

That has started to change. In September 2025, Mercosur signed an FTA with the European Free Trade Association (EFTA) — which includes Switzerland, Norway, Liechtenstein and Iceland — and in January, it did the same with the European Union, the biggest deal in the South American bloc’s history.

On top of that, an FTA with Canada is widely expected to clear this year, while talks continue with Singapore, Japan, Indonesia, South Korea, the United Arab Emirates, Vietnam and El Salvador.

What changed?

Julieta Zelicovich, an international affairs analyst and professor at the Universidad Nacional de Rosario (UNR), told the Herald that “the shift in Mercosur’s international strategy didn’t start now,” but is “the result of 10 years of a new negotiating approach.”

“It was around 2016, at one of the summit meetings, that the presidents decided to move forward with what they called ‘updating the external agenda,’” she said. 

In that context, “Mercosur decided to review the free trade agreements it had and start negotiating new ones.”

There was a problem, though. “Mercosur tends to take pretty firm positions, especially when it comes to protecting sensitive sectors, and it goes on the offensive in agriculture, which happens to be the sensitive sector for its counterparts. That made for trade talks that were hard to close.”

The shift came after the pandemic and the change in U.S. trade policy. “The international context has pushed many of these counterparts, like the European Union or Canada, to soften their previous negotiating positions and finally prioritize the Mercosur agenda,” she added.

The roles of Argentina and Brazil

Marcelo Elizondo, president of the Argentine Committee of the International Chamber of Commerce (ICC), told the Herald that the shift in Mercosur started with a change in Argentina’s stance. After Milei took office, the country “showed an appetite for opening up that it had never shown before.”

“Uruguay has always favored greater openness, and Paraguay too. Brazil has gone back and forth, but it has consistently favored the EU deal. Argentina, for a long time, was very closed off,” he said.

In Brazil’s case, he said several factors are at play. Among them: “Lula da Silva’s effort to position himself as a player in the new geopolitics.”

Elizondo also noted that “there are many sectors in Brazil that used to be protectionist and have now grown and integrated with multinational companies that are pushing for openness, and that has also generated some support for opening up.”

“Brazil realized it was putting Mercosur — an asset of its foreign policy — at risk by holding onto a closed economic stance while the other three partners were pushing to open up,” he added.

As the bloc’s largest member, Brazil “always holds a leadership position because of its size,” though he insisted that “the big push came from Argentina.”

Federico Vaccarezza, secretary of the Europe Department at the Institute of International Relations at the Universidad Nacional de La Plata (UNLP), painted a different picture.

He argued that “what matters to negotiators on the other side of the table is Brazil — Argentina doesn’t matter as much,” since it accounts for just “0.3% of world trade.”

He also explained that “it’s not that Brazil didn’t want to go after these trade deals. What Brazil had was a view on timing — on when to go after them.”

“Now it’s aiming to strengthen its productive and export capacity by opening up markets it didn’t have before, drawing in investment and giving the state an active role,” he added.

The potential of the new deals

Looking ahead, Elizondo highlighted the importance of the Canada FTA for attracting investment. “It’s an economy with a lot of complementarity, and there’s also room to pursue joint investment projects.” 

Vaccarezza added that the deal “would be one of the most important, especially on mining.”

Both also pointed to the need to open up markets in Asia. Elizondo said “a deal with Japan would be very important,” along with one with South Korea.

Vaccarezza also said that “Vietnam is a really good opportunity to break into Asia with food and energy, and Indonesia is also a phenomenal market when it comes to energy.”

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المصدر: Buenos Aires Herald