Mercosur Opens Trade Talks with China
In early February 2026, Brazil signalled new openness to formal Mercosur-China trade negotiations. On 7 February, the China-Global South Project and The Straits Times reported that during Uruguayan President YamandΓΊ Orsi's visit to Beijing, a joint statement with Xi Jinping expressed hope that talks would begin "as soon as possible."
China has been Brazil's largest trading partner since 2009, surpassing the EU. Now a formal agreement covering the entire Mercosur bloc may be taking shape β and for the European Union, that changes the calculus.
Three fronts at once
Mercosur has never simultaneously pursued trade negotiations with three major powers:
| Partner | Status | What Mercosur gets |
|---|---|---|
| EU | Deal signed, ratification ongoing | Free trade, GI protection, 450m consumers |
| US | Bilateral pact with Argentina (5 Feb 2026) | Energy, minerals, 100,000t beef |
| China | Negotiations opened (Feb 2026) | Infrastructure, tech, massive soy purchases |
What China wants
Beijing's priorities are clear:
- Agricultural commodities β Brazil is the world's top soy exporter, China the top importer
- Critical minerals β lithium (Argentina holds some of the world's largest reserves), iron ore (Brazil's Vale)
- Infrastructure β Belt and Road projects in ports, roads, railways
In return, China offers manufactured goods, 5G technology (Huawei), and electric vehicles. BYD is already building a factory in Bahia, Brazil.
A partial deal, not a comprehensive one
Unlike the EU-Mercosur free trade agreement, the proposed format is a partial deal focused on non-tariff barriers β import quotas, customs procedures, sanitary regulations. Not tariffs. This avoids direct overlap with the European agreement.
Complication: Paraguay maintains formal diplomatic relations with Taiwan, not China. Any Mercosur agreement requires consensus from all members. Paraguayan President Santiago PeΓ±a has signalled openness, on condition that relations with Taipei are respected.
Why this matters for the EU
The EU-Mercosur agreement (Art. 2.1) establishes a free trade area β something China is not yet offering. But:
- Market competition: The EU exports machinery, cars, chemicals to Mercosur. China increasingly does the same, at lower prices
- Critical raw materials: Lithium, copper, iron ore β the EU needs them for the green transition. China wants to lock them up
- Time works against the EU: The longer ratification takes, the more time China has to entrench
What it means
For EU exporters: Competition with China in Mercosur markets will intensify. Companies that don't move quickly risk losing ground.
For Mercosur countries: Three major powers bidding for your markets is the strongest negotiating position in the bloc's history.
For the ratification process: Every month of delay is a month China uses to strengthen its position.
Sources: China-Global South Project (07.02.2026), The Straits Times (07.02.2026), Reuters, G1, Valor EconΓ΄mico. EU-Mercosur Agreement: Art. 2.1 (Free trade area).
βThe Parties shall establish a free trade area for goods over a transitional period starting on the date of entry into force of this Agreement.β
β Chapter 2 - Trade in Goods, Article 2.1