Mercosur trade bloc - Benefits for Canada
Expanding Canada’s trade with large, fast-growing markets, such as Mercosur, is a priority for the Government of Canada and contributes to its trade diversification strategy. The government’s objectives are to increase Canada’s prosperity by creating more opportunities for more Canadians to pursue new markets, compete and win. The strategy also aims to provide Canadians with a greater choice of affordable products, raises living standards in the process and creates well-paying jobs for the middle class.
With a combined population of 295 million and real GDP of over $2.5 trillion, Mercosur—the South American trading bloc composed of Argentina, Brazil, Paraguay and Uruguay—offers Canada an opportunity to deliver on its ambitious trade agenda with large, fast-growing markets. Opportunities abound to increase our current $9.9 billion in bilateral trade (2020), which will help to create more jobs in Canada. This includes opportunities for small and medium-sized enterprises (SMEs), which will benefit by having increased access to markets to sell their products. An FTA with Mercosur could also strengthen and rebalance the trading relationship, as nearly half of Canadian exports to Mercosur are dutiable (49%), compared to only 8% of Canada’s imports from Mercosur.
Combined with Canada’s existing FTAs, an agreement between Canada and Mercosur would enable 92% of Canada's current trade with South American countries to benefit from preferential access. It is also an opportunity to be one of the first major economies to obtain preferential access to Mercosur’s highly-protected market.
Opportunities by sector
As the world’s fifth largest economy as a bloc, Mercosur presents significant commercial opportunities for Canadian companies and workers in sectors across the country—from British Columbia’s lumber and Ontario’s auto parts and chemicals products to Quebec’s aerospace sector and the Atlantic provinces’ fisheries. This important market is ripe for Canadian products and for the specialized know-how of the workers who produce them.
A comprehensive and ambitious outcome in a FTA with Mercosur would enhance market access for Canadian world-class goods and services, creating more opportunities for established and first-time exporters to tap a rapidly growing market and generating new jobs at home.
For example, market access, in the form of reduced tariffs, could be enhanced for Canadian exporters in a number of industrial sectors, including:
- automobiles and parts (current tariffs up to 35%)
- chemicals and plastics (current tariffs up to 35%)
- pharmaceuticals (current tariffs up to 14%)
- aluminum (current tariffs up to 20%)
- machinery and equipment (current tariffs up to 35%)
- information and telecommunications technology (current tariffs up to 35%)
- forestry sector (current tariffs up to 35%).
Opportunities also exist for services suppliers in sectors where Canadians excel, such as in infrastructure, distribution and logistics; transportation; tourism and travel-related services; as well as services linked to the extractive industries.
Canada’s inclusive approach trade
A Canada-Mercosur FTA would be a strategic opportunity for Canada to advance its inclusive approach to trade in an important and growing region. Mercosur member countries are willing partners in the pursuit of tangible inclusive trade elements, such as in the areas of gender, SMEs, environment and labour, as part of these negotiations.
As part of its commitment to transparency and openness, the government has listened to a broad range of Canadians, including representatives of industry and business organizations, Indigenous groups, labour unions, civil society groups, environmental groups and Crown corporations, as they share their views on strengthening trade relations with Mercosur. While the initial consultation period in the Canada Gazette is over, officials continue to accept views and submissions from Canadians on this initiative.
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