Mercosur kicks off free trade talks with Japan as EU deal quarrels dominate Asunción summit

Summit launch and Japan pivot

Mercosur’s 68th heads‑of‑state summit in Asunción on Tuesday formally opened economic partnership talks with Japan, a first step towards a free‑trade area spanning 400 million people and a combined GDP of $7 trillion. The announcement came as host Paraguay handed the bloc’s six‑month presidency to Uruguay, with Argentina’s Javier Milei skipping the meeting. Bilateral trade between Mercosur and Japan reached $13.7 billion in 2025, underscoring the commercial stakes.

Brazil’s Lula da Silva, who with Japanese premier Sanae Takaichi had already discussed the launch at June’s G7, confirmed Mercosur is “continuing to move closer to the most dynamic markets on the planet.” Two preparatory meetings had been held in January and March 2026, building on the strategic partnership signed last December.

The EU quota dispute

The bloc’s landmark trade accord with the European Union, in force provisionally since 1 May, drew sharp criticism from Paraguayan President Santiago Peña. He described “a bitter taste” from what he called an asymmetric rollout, where tariff‑free export quotas for goods such as eggs, meat, rice and honey were allocated on a first‑come basis instead of being shared equitably.

“What good is an agreement that reproduces existing asymmetries instead of correcting them? When we talk about quotas we are not asking for privileges, we are asking for equity.”

Paraguay, a landlocked nation with higher logistics costs, had demanded 25 % of quotas. Foreign Minister Rubén Ramírez said the matter remains under negotiation and insisted “what we want is for that distribution to be equal, considering the efforts we have made.” No breakthrough was reached at the summit.

Internal strains and other fronts

Tensions over the bloc’s direction resurfaced: Milei’s government wants freedom to strike bilateral deals with third countries, while Lula advocates strong regional unity and announced Brazil would contribute $100 million a year to the Mercosur structural convergence fund. Uruguay’s Yamandú Orsi, the new president pro tempore, said his term would prioritise implementing recently concluded agreements with the EU and EFTA and wrapping up talks with Canada and the UAE. India and Vietnam were also named as active fronts.

“From the presidency, Uruguay will work to conclude the negotiations with Canada and the United Arab Emirates, as well as move forward with India and Vietnam.”

China on the horizon

Lula told leaders Mercosur aims to launch negotiations with China soon, building on a spate of trade diversification moves that have gained urgency since the imposition of sweeping U.S. tariffs under President Trump. The bloc views deeper integration with Asia as the logical next step after the EU pact.

Solidarity with Bolivia

The summit issued a joint statement voicing concern about seven weeks of violent protests in Bolivia and threw its support behind President Rodrigo Paz, who attended as a full participant amid the country’s ongoing accession process.