OTTAWA — A free trade agreement with the South American trade bloc known as Mercosur could make it easier for Canadian pharmaceutical companies to bid on contracts to supply Brazil’s massive public health-care system, that country’s envoy to Ottawa told The Logic.

“There is space in this market for other companies—not only for Brazilian companies,” Ambassador Carlos Alberto Franco França said Friday in an interview at his official residence. “When you have openness in this field, it will be good for Canadian companies [and] for Brazilian companies as well,” he added. “Joint ventures, maybe.”

Canada launched negotiations in 2018 for a free trade agreement with Mercosur, which is a customs union and trade bloc made up of Brazil, Argentina, Paraguay and Uruguay. Bolivia joined in 2024, and is phasing in its participation. Mercosur has a combined gross domestic product of more than US$3 trillion. If the bloc were a single economy, it would be the fifth largest in the world. Canada’s exports to Mercosur were worth about $3.1 billion in 2024, but its goods currently face tariffs of up to 35 per cent in those countries, depending on the sector. Canada imported $12.8 billion from the bloc that year.

Talks stalled during the COVID-19 pandemic, and França said Canada then prioritized relationships with other trading partners. Canada and Brazil moved last August to revive them under Prime Minister Mark Carney and President Luiz Inácio Lula da Silva. They hope to sign a deal by the end of this year, but França said negotiations could wrap up as early as next month. “The reason why this agreement wasn’t closed before is because there was not strong political will,” he said. “Now, it’s definitely so.”

Brazil has a two-tier health-care system, but the publicly funded Sistema Único de Saúde (SUS) is the sole provider for nearly three-quarters of the country’s roughly 213 million people. The SUS includes pharmacare for essential medicines, although a recent study suggested less than a third of the population receives all its prescription medications free of charge through the public system. 

Either way, the Brazilian government is the main buyer of pharmaceuticals in a market that was worth US$35.6 billion in 2023. Foreign companies need local representation to take part in bids. “The Brazilian pharmaceutical market is a big market,” França said, before adding: “There’s a lot of companies from India interested in it.”

A spokesperson for International Trade Minister Maninder Sidhu confirmed the federal government sees a “major and growing pharmaceutical market” in Mercosur, where Canadian drugs currently face tariffs of up to 14 per cent. In Brazil specifically, Canada exported about $41 million worth of pharmaceuticals last year. “Negotiations are currently progressing and we are examining various sectors, including pharmaceuticals, to ensure we have an agreement in the best interest of Canadians and that advances our trade diversification objectives,” Huzaif Qaisar wrote in a statement.

The pressure is on for Canada to secure its deal. Mercosur’s provisional trade agreement with the European Union, which was decades in the making, took effect last Friday. Its tariff reductions will be phased in gradually, França said, which means there is time for Canada to catch up.

Not everyone is enthusiastic about that. One of the most controversial aspects of the EU-Mercosur trade talks involved agricultural exports. France was especially concerned about an influx of low-cost beef from Brazil and Argentina. The provisional deal phases in access for beef to Europe slowly, with the first 99,000 tonnes subject to a reduced tariff of 7.5 per cent.

On this side of the Atlantic, the Canadian Cattle Association is urging the federal government to avoid opening Canada’s beef market further through the deal with Mercosur. The group representing 60,000 cattle farmers and feedlots across the country said that beef imports from Mercosur regions grew by 238 per cent from 2021 to 2025. “Canadian beef farmers and ranchers are opposed to any beef access in a Mercosur trade deal which would result in increased imports of low-quality beef for Canadian consumers,” Tyler Fulton, president of the association, wrote in a statement.

Gustavo Fávero, the head of economic affairs at the Brazilian embassy in Ottawa, said most of the beef that Canada currently imports from Brazil is used to make processed foods, such as canned soup. “We are not a threat to local producers,” he said. França, the ambassador, said Brazilian consumers regard Canadian steak as a luxury product. “There is space for both countries and in both markets,” he said.

The Brazilian diplomats see room for co-operation in other areas. Fávero noted fuel standards in Canada requiring growing use of ethanol, which Brazil produces in large quantities from sugar cane. Brazil has historically done a lot of trade in biofuels with the U.S., which is also its major competitor, but that has been disrupted by the trade war and Brazil’s rising domestic demand. “We also see the opportunity with biofuels with Canada,” Fávero said. 

Brazil would also be interested in Canada’s small modular reactors, França said. “If the Canadian producers of SMRs get to Brazil or to Mercosur, they can give you something that you don’t have now: that’s scalability,” he said, adding: “We need this equipment, but of course, it’s not only Canada that can sell it to us.”

Canada has a strong and positive image in the South American country, França said. Brazilians can look askance at investment from the U.S. and China, he added, but that does not apply to Canada, the source of about $19.8 billion in foreign direct investment to their country in 2024. França, who served as foreign affairs minister under former president Jair Bolsonaro from 2021 to 2022, said he had a message to the Canadian government after he arrived in Ottawa the following year.

“Look, you have a great deal of soft power,” he recalled saying. “Cash it in,” he said, in Brazil and wider South America. “You don’t have to wait for the Americans.”