Japan and Mercosur have announced the formal start of negotiations for an Economic Partnership Agreement (EPA), equivalent to a free trade treaty between the two parties. The decision was announced Tuesday following a meeting between Japanese Prime Minister Sanae Takaichi and Brazilian President Luiz Inácio Lula da Silva on the sidelines of the G7 Summit held in Évian-les-Bains, France.
The two leaders welcomed the release of a joint statement announcing the start of negotiations and expressed hope to reach a "mutually beneficial" agreement that strengthens bilateral economic relations. Lula said talks could begin later this month and that he expects "good news" at the next Mercosur summit scheduled for June 30 in Asunción, Paraguay, under the country’s pro tempore presidency.
The negotiations are expected to focus on reducing tariffs on Japanese automobiles and diversifying sources of oil and critical minerals supply for Japan. The Asian country depends on about 90% of its oil imports from the Middle East, and the recent disruption in the Strait of Hormuz, caused by the conflict involving the United States, Israel, and Iran, led Tokyo to tap into its strategic reserves.
Before the political announcement, diplomatic delegations maintained an intense work pace in the first half of 2026, holding two key meetings in January and March. These sessions allowed for a broad agenda covering trade, investments, and analysis of the international context, as well as detailed exchanges of information on areas of interest and mutual tariff sensitivities.
Japan and Mercosur have been exploring the possibility of a trade agreement for several years. In December 2025, both parties signed a Strategic Partnership Framework to expand cooperation in trade, investments, energy transition, and economic security. Currently, Mercosur is one of the major economies with which Japan does not yet have a preferential trade agreement.
Current bilateral trade is characterized by the export of agri-food products and raw materials from South America in exchange for Japanese manufactured goods, industrial inputs, and high-tech products. Japanese investments also hold significant weight in the region, with a presence in strategic sectors such as the automotive industry, energy, logistics, and innovation projects.