The UK and Mercosur are set to begin trade talks, as rising tariffs disrupt global trade and push countries to diversify their economic partnerships.
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Brazilian Foreign Minister Mauro Vieira and British Foreign Secretary Yvette Cooper discussed the start of formal negotiations between the UK and Mercosur at a meeting on Tuesday, according to officials from both countries who requested anonymity because it was a private conversation.
Brazil will now discuss next steps with its partners Argentina, Uruguay, Paraguay and Bolivia, and the first working meeting could take place early next year, one of the sources said.
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UK Trade Secretary Chris Bryant is committed to signing a trade agreement with Mercosur: his first international trip after being appointed to the role was to Argentina and Brazil in September, where he discussed the opportunity to reduce trade barriers with these countries. Later that month, he stated that joining Mercosur was a “clear decision”.
The move towards rapprochement with the bloc has been continuing since Brexit, when the UK withdrew from the European Union in 2020. Since then, authorities from Brazil and the UK have already been talking informally about the possibility of launching negotiations on a free trade agreement between the Britons and Mercosur in 2021.
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The UK-Mercosur rapprochement follows a trend of countries looking for new partners at a time when tariffs imposed by Donald Trump are reorganizing trade relations and China is restricting access to key products, including vital minerals.
President Luiz Inacio Lula da Silva, who currently holds the rotating presidency of Mercosur, has committed to expanding the bloc’s trade partnerships as it seeks to finalize a long-awaited agreement with the European Union before the end of this year.
Mercosur is also seeking a deal with the United Arab Emirates and has resumed negotiations with Canada. Discussions with Indonesia and Vietnam are expected to begin soon.
UK trade with Brazil, Mercosur’s largest economy, grew by 11% between July 2024 and the end of June this year, reaching £13.4 billion ($17.6 billion), according to official data. Trade with Argentina totaled £2.3 billion and showed similar growth over the same period.
Brazil ranked 26th among the UK’s largest trading partners in this period, and Argentina ranked 67th.
By comparison, in 2024, trade between the EU and Mercosur reached €111 billion, of which €55.2 billion were in exports and €56 billion in imports, according to EU Council data. Brazil accounted for more than 80% of the total, and played a prominent role in the bloc’s economic relations with Europe.
Lula’s Minister of Foreign Trade, Tatiana Prazeres, said that the conclusion of the EU-Mercosur agreement increases interest in the region and opens the way for the bloc to search for new agreements.
“This is a historic moment to expand the network of Mercosur trade agreements,” Prazeres said in an interview on Wednesday. “This is also not only about the fact that we are concluding negotiations (with the EU), but also about a more challenging external scenario, where countries are looking for partners who are interested in trade, based on rules that want to promote trade, that want security and legal stability.”
The South American trading bloc hopes to sign an agreement – under negotiation for two decades – with the European Union this year, in addition to concluding an understanding with the United Arab Emirates. Mercosur has also resumed talks with Canada and hopes to soon do the same with Vietnam and Indonesia.
Prazeres said that in addition to ongoing discussions, the trade bloc recently agreed to negotiating mandates with Vietnam and Indonesia, which will allow trade talks to begin soon.
She also traveled to India last month to lay the groundwork for expanding the existing trade agreement between the South Asian country and Mercosur.
“India is able to join a first-class group of Brazil’s trading partners,” he said. “It is not a political judgement, but rather a judgment on the perspective, growth, and trade flow of this country which is the most populous country in the world, and which is growing at accelerating rates and, therefore, generating opportunities.”
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