Canada restarts free trade negotiations with South America's Mercosur trading bloc

Canada's hectic international trade agenda is about to get even busier, as it takes new steps toward formal free trade negotiations with Mercosur, the trading bloc that includes the key South American markets of Argentina, Brazil, Paraguay and Uruguay, CBC News has learned.

A government source, speaking on condition of anonymity, revealed that tomorrow the federal government will kick off a consultation process to help shape Canada's negotiating position: what it wants to target in these large consumer markets, and what it might be willing to give up in order to make that happen.

Canada held exploratory talks with Mercosur under the previous Conservative government in 2011-12. But talks have been dormant since then.

According to figures from Global Affairs Canada, the four members of Mercosur had a combined gross domestic product in 2016 of $3.2 trillion and a population of 260 million. Bilateral merchandise trade between Canada and the members of the trading bloc totalled nearly $8.1 billion in 2016.

When Prime Minister Justin Trudeau visited Argentina in November, he and President Mauricio Macri spoke of wanting to ramp up trade between their countries. A key trade barrier blocking Canadian pork imports was lifted during that visit.

Agricultural commodities and other resource industries, including lumber, are expected to figure significantly in the talks. But some of the negotiations may be tense, given past disputes between Canada and Brazil over beef and the aerospace industry.

Technical delegations met in Argentina, the country currently serving as chair of the group, earlier this month to help assemble the framework for formal negotiations.

A South American media report said delegates exchanged information on their respective goods and services markets, non-tariff barriers, animal and plant sanitary regulations, investments, government procurement, labour issues and environmental regulations.

Diversification strategy

Canadian free trade negotiations with the largest economic players in South America would come at a strategically significant time.

Major trading partners of the United States, including countries involved in these negotiations, are trying to manage uncertainty caused by recent moves by U.S. President Donald Trump's administration. Diversifying into significant markets beyond the U.S. helps insulate an economy from protectionist moves in Washington.

Canada has also emerged as a key player in talks that have emerged after the U.S. pulled out of the 12-country Trans-Pacific Partnership trade agreement. 

That group of now 11 countries, with others possibly to follow, is now called the High-Level Asia Pacific Dialogue.

International Trade Minister François-Philippe Champagne has invited the countries' chief negotiators to meetings in Toronto next Tuesday and Wednesday, as they evaluate what parts of the previous TPP agreement could be transferred or renegotiated between the reconfigured group.

Now Canada could be in free trade negotiations with countries on both the Atlantic and the Pacific side of South America.

Venezuela was originally part of Mercosur, but its membership was suspended in December.