Canada Aims to Finalize Mercosur Trade Deal by Autumn

Canada is pushing to finalize a free-trade agreement with South America's Mercosur bloc by autumn. Maninder Sidhu, Canada's minister of international trade, expressed optimism about accelerating negotiations during the World Trade Organization (WTO) conference in Yaounde, Cameroon.

The minister revealed that he has held bilateral meetings with Argentina and Paraguay and plans to meet with Brazil and Uruguay later this week. The potential Mercosur-Canada trade agreement is a key topic of these discussions. 'We're very ambitious. I think we can get it done,' Sidhu stated, highlighting Canada's efforts to diversify its trade partners amid uncertainty linked to U.S. tariffs.

According to Reuters, an Argentine government official indicated that the agreement is expected to be signed in September or October, roughly a year since negotiations formally restarted. A diplomat based in Brazil confirmed that negotiations are progressing at a record speed and are likely to result in a deal this year.

The push for this trade pact comes as Canada seeks to mitigate risks associated with U.S. tariffs. South America, particularly Brazil, is seen as an essential trade partner for Canada. The intensified efforts reflect broader global discussions on trade diversification and supply chain resilience, which were also highlighted at the WTO conference.

Meanwhile, the WTO conference in Yaounde addressed significant digital trade issues. A group of 66 WTO members agreed to introduce the world's first baseline digital trade rules through an interim arrangement, bypassing consensus hurdles. This agreement aims to foster an open environment for digital trade and will be activated among consenting participants while pursuing broader incorporation into the WTO framework.

The e-commerce moratorium, which bans customs duties on electronic transmissions such as digital downloads and streaming, is also a contentious topic at the conference. The moratorium, first adopted in 1998, has been renewed every two years and was set to expire this month. Developed nations like the U.S., EU, Canada, and Japan advocate for its permanent extension, citing the need for predictability in global digital trade.

However, some developing countries, including India, oppose the moratorium, arguing it deprives them of tariff revenue needed for infrastructure and closing the digital divide. Talks to reform the WTO and extend this moratorium entered their final day with no breakthrough yet in sight, diplomats said. According to TimesLIVE, Brazil blocked a bid by the US and other countries to extend the moratorium, dealing a fresh blow to the embattled trade body.

The World Trade Organization is unable to deal with core challenges of the global trading system, U.S. Trade Representative Jamieson Greer said on Tuesday. Speaking in an interview on Bloomberg television, Greer noted that while Washington is not ready to leave the WTO, the organization has struggled to address structural imbalances and currency issues. He emphasized that the U.S. had proposed reforms during the Yaounde meeting but faced opposition from countries including Brazil and Turkey.

WTO director-general Ngozi Okonjo-Iweala stated that the e-commerce moratorium had expired, meaning countries could apply duties on electronic goods such as digital downloads and streaming. She expressed hope that Brazil and the US would reach an agreement on it. The marathon talks at the meeting in Cameroon did make progress on drafting a plan for broader reform of the organisation, though agreements are still pending.

Failure to reach a collective decision in Yaounde was described as a 'major setback for global trade' by Britain’s business and trade secretary, Peter Kyle. The talks were seen as a test for the WTO's relevance after a year of trade turmoil and major disruptions due to the Iran war.

Diplomats worked throughout Sunday to close the gap between Brazil, which had originally sought a two-year extension, and the US, which wanted a permanent one. A proposal for a four-year extension with a one-year sunset buffer was drafted but not supported. Developing countries have opposed a lengthy extension, arguing that the moratorium denies them potential tax revenue.

A US official said Brazil had opposed a 'near-consensus document', adding, 'It’s not US vs Brazil. It’s Brazil and Turkey vs 164 members.' Meanwhile, a Brazilian diplomat stated that 'the US wanted the sky,' while Brazil aimed to be prudent in renewing the moratorium by only two years as in previous ministerial conferences.

Business leaders lamented the outcome of the talks, with International Chamber of Commerce secretary-general John Denton saying it was 'particularly concerning at a time of real strain on the global economy.' Microsoft’s director of customs and trade affairs, John Bescec, stated: 'Business was expecting more certainty and predictability.... Instead, we got the exact opposite.'

Getting a deal on the e-commerce moratorium was seen as key to securing support for the WTO from the US. Discussions will continue in Geneva on improving decision-making in a consensus-based system that has long been stymied by a few countries.