Japan Plans Trade Talks With South America’s Mercosur Bloc

LATIN AMERICA · ECONOMY

Japan plans to open negotiations with South America’s Mercosur bloc on a trade and economic-partnership deal, according to a Japanese press report, in a move that would deepen the region’s commercial ties with Asia.

What Japan is planning with Mercosur

Japan intends to begin talks in June toward an economic-partnership agreement with Mercosur, the South American trade bloc, the business newspaper Nikkei reported. The report did not name its sources.

The start of negotiations could be announced at a meeting between Japan’s prime minister, Sanae Takaichi, and Brazil’s president, Luiz Inacio Lula da Silva, on the sidelines of the Group of Seven summit in France in mid-June.

It would be the first free-trade-style negotiation launched by the Takaichi government, which took office last October. Nothing has been signed, and the report describes an intention to begin talks rather than a concluded deal.

Why the two sides want a deal

For Japan, the talks are about supply security as much as trade. According to the report, the deal would aim to lower tariffs on cars and to diversify Japan’s sources of oil and critical minerals, which are central to its industry.

Japan imports the large majority of its crude from the Middle East, a dependence underlined by recent disruption around the Strait of Hormuz. South America offers an alternative source of energy and minerals.

For Mercosur, the move fits a push to widen its export markets. The bloc groups Argentina, Brazil, Paraguay and Uruguay, with Bolivia in the final stage of joining, and its leaders have spoken of strengthening ties with Asian economies.

A wider trade realignment

The plan follows a busy stretch for Mercosur’s trade agenda. A landmark agreement with the European Union recently took provisional effect, and the bloc has signed a deal with a group of European free-trade nations, spurring interest from other partners.

Japan and Mercosur agreed late last year to strengthen ties through a strategic-partnership framework. The reported negotiations would build on that step.

Whether the talks deliver an agreement is far from certain, as past trade negotiations in the region have shown. Much will depend on how the two sides handle sensitive sectors such as farming and autos.

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Frequently Asked Questions

What has Japan actually announced?

Nothing formal yet. A Nikkei report says Japan plans to start talks in June toward an economic-partnership deal with Mercosur, possibly announced at a Takaichi-Lula meeting. It is an intention to negotiate, not a signed agreement.

What is Mercosur?

A South American trade bloc made up of Argentina, Brazil, Paraguay and Uruguay, with Bolivia in the final stage of joining. It negotiates trade deals as a group.

What would the deal cover?

According to the report, it would focus on lowering car tariffs and on diversifying Japan’s supplies of oil and critical minerals, with South America as an alternative source.

Why does it matter for Latin America?

It signals South America’s drive to widen its trade partners in Asia, coming soon after Mercosur’s agreement with the European Union took provisional effect.

When could talks begin?

The report points to June, with a possible announcement at the Group of Seven summit in France. Any negotiation would then take time to produce a result.

Connected Coverage

For more on the region’s trade, see our coverage of Brazil’s record trade surplus. For another effort to open a foreign market, see our report on Brazil’s bid to sell fish in Europe.

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