Will Canada–Mercosur Trade Revival Benefit Colombia, Peru, and Ecuador?

Reigniting Trade Amid Global Uncertainty

Canada is reigniting talks with Mercosur — the South American trade bloc comprised of Brazil, Argentina, Paraguay, and Uruguay — to revive a long-stalled free trade agreement. This move aligns with Prime Minister Mark Carney’s strategy to diversify trade and reduce reliance on the U.S. amid worsening tariff barriers.

Negotiations could restart as early as September or October, with a projected timeline of one year to reach an agreement. For Canada, this signals a major pivot in strategy—seeking economic alliances that extend beyond its historical reliance on the U.S.

Why This Matters for Colombia, Peru, and Ecuador

Although these three countries are not Mercosur members, a revived FTA between Canada and Mercosur could still bring important ripple effects across the region. Here’s how:

1. Strengthened Regional Trade Networks
   Canada already holds bilateral FTAs with Colombia, Peru, and Chile, and has arrangements like FIPAs with Ecuador and Argentina. A revived Canada–Mercosur deal would enhance regional trade fluidity, reinforce trust-based networks, and could harmonize standards across Latin American trade blocs.

2. Expanded Market Access via Integrated Supply Chains
   Canada’s interest in Mercosur stems partly from its need to secure minerals, agricultural goods, and other resources. This creates opportunities for strategically positioned Latin American exporters — such as Colombian coffee, Peruvian superfoods, or Ecuadorian cacao — to integrate into these broader value chains.

3. Diversification & Resilience in Canadian Imports
   Rising U.S. tariffs have driven Canada to actively reduce its export dependence on its southern neighbor. An agreement with Mercosur emphasizes this shift, making Canada a more receptive market for Latin American goods, even beyond the Mercosur bloc itself.

4. Political Momentum & Regional Stability
   Mercosur’s internal summit has recently granted members more autonomy over duties, enabling quicker bilateral trade agreements based on national priorities. This flexibility could facilitate parallel or complementary agreements between Canada and individual countries like Colombia, Peru, and Ecuador.

Sectoral Opportunities for Non-Mercosur LATAM Exporters

Canada’s trade with Mercosur (particularly Brazil) was valued at $9.1 billion in 2024, with Brazil holding a $3.5 billion surplus. If a new deal can unlock an estimated $15 billion in annual trade, as some analysts project, this could significantly shift regional trade patterns to benefit all of Latin America.

What to Watch for in the Coming Months

• Political alignment within Mercosur — Countries like Argentina, Uruguay, and Brazil must agree on terms before formal talks begin.

• Negotiation scope — Will it prioritize goods only, or include services, investment, and regulatory alignment?

• Inclusion of sustainable and Indigenous-rights clauses — A key concern in Canada–Mercosur discussions.

• Spin-off trade agreements — Renewed momentum could also catalyze faster progress in Canada–Colombia, Canada–Peru, or Canada–Ecuador dialogues.

Final Thoughts

The potential revival of the Canada–Mercosur trade agreement isn’t just a bilateral matter—it presents strategic benefits to the broader Latin American region. Colombia, Peru, and Ecuador stand to gain from enhanced trade frameworks, improved market integration, and access to a resilient Canadian market seeking diversity and stability.

If you’re a Latin American exporter looking to capitalize on shifting trade dynamics, LBS can help you navigate the changing landscape—offering strategy, compliance, and local market entry solutions tailored to your goals.