The UK and Mercosur are preparing to begin trade talks as rising tariffs disrupt global trade and countries seek to diversify their economic partnerships.
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Brazilian Foreign Minister Mauro Vieira and British Foreign Secretary Yvette Cooper discussed starting formal negotiations between Britain and Mercosur during a meeting on Tuesday, officials from both countries said on condition of anonymity because the conversation was private.
Brazil will now discuss next steps with partners Argentina, Uruguay, Paraguay and Bolivia, with the first working meeting potentially as early as next year, one of the sources said.
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UK Trade Secretary Kris Bryant is committed to signing a trade deal with Mercosur. His first trip since being appointed to the position was in September to Argentina and Brazil, where he discussed opportunities to reduce trade barriers with those countries. Later that month, he said becoming a Mercosur partner was a “natural decision”.
Since Brexit, the UK’s withdrawal from the European Union in 2020, there has been a continued movement towards closer ties with the EU. Since then, Brazilian and British authorities were already informally discussing the possibility of starting negotiations for a free trade agreement between the UK and Mercosur in 2021.
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The UK’s move towards Mercosur is in line with a trend among countries seeking new partners as tariffs imposed by President Donald Trump reshape trade relations and limit China’s access to key products, including critical minerals.
President Luiz Inacio Lula da Silva, who currently holds Mercosur’s rotating chairmanship, is committed to expanding Mercosur’s trade partnership in hopes of finalizing a long-awaited agreement with the European Union by the end of this year.
Mercosur is also aiming to conclude an agreement with the United Arab Emirates and has resumed negotiations with Canada. Discussions with Indonesia and Vietnam are also expected to begin soon.
Trade between Brazil, Mercosur’s largest economy, and the UK rose by 11% from July 2024 to the end of June this year, reaching 13.4 billion pounds ($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 and Argentina 67th among the UK’s largest trading partners during this period.
In comparison, trade between the European Union and Mercosur amounted to EUR 111 billion in 2024, with exports amounting to EUR 55.2 billion and imports amounting to EUR 56 billion, according to data from the Council of the European Union. Brazil accounts for over 80% of the total and plays an important role in economic relations with Europe.
Lula’s trade minister, Tatiana Prazeres, said the conclusion of the EU-Mercosur agreement had increased interest in the region and created room for the EU to explore new agreements.
“This is a historic moment that expands Mercosur’s network of trade agreements,” Prazeres said in an interview Wednesday. “This is related not only to the fact that we are concluding negotiations[with the European Union]but also to a more difficult external scenario in which countries are looking for partners with an interest in trade, based on rules that require trade facilitation, security and legal stability.”
In addition to striking a deal with the United Arab Emirates, the South American trade bloc hopes to sign a deal this year with the European Union, which it has been negotiating for 20 years. Mercosur has resumed talks with Canada and hopes to hold similar talks with Vietnam and Indonesia soon.
Prazeres said that in addition to ongoing talks, the trade bloc recently approved negotiating missions with Vietnam and Indonesia, which will allow trade negotiations to begin soon.
He also visited India last month to lay the foundation for expanding the existing trade agreement between the South Asian country and Mercosur.
“India can join Brazil’s group of first-tier trading partners,” he said. “This is not a political decision, but a judgment about the prospects, growth and trade flows of the world’s most populous, fastest growing country and therefore creating opportunity.”
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