Brazil and Mexico have begun talks on a free trade deal, a Brazilian official said on Monday, seeking to deepen commercial ties between the two largest economies in Latin America as trade tensions threaten to undermine global growth.
Marcos Troyjo, Brazil’s deputy economy minister for foreign trade, said Brazil had formally started free trade talks with Mexico, which recently ratified a new trade pact with the United States and Canada to replace the North American Free Trade Agreement (NAFTA).
Troyjo said that Mexico had traditionally focused on trading with its NAFTA partners but wanted to diversify. He believed Brazil would be able to export more agricultural products to Mexico, Latin America’s No. 2 economy.
“Trade between Brazil and Mexico have always been below the volumes desired. This was partly because Mexico gave preferential treatment to other trade partners, including the U.S. and Canada,” he said at a conference hosted by the Brazil-China Business Council in Sao Paulo.
“Now the agreement between Mexico, the U.S. and Canada has changed (things). Brazil has a more immediate interest in increasing its exports of agricultural commodities to Mexico.”
The talks between Brazil and Mexico represent the latest chapter in Brazil’s efforts to open up its hidebound economy and trade more with the rest of the world.
Under far-right President Jair Bolsonaro, Brazil has already begun talks on a trade treaty with the United States and is hoping a hard-won pact between the European Union and the Mercosur bloc of South American countries will be ratified.
However, Brazil’s efforts to broaden commercial ties also come as the trade war between the United States and China has sent jitters through the global economy, igniting fears of widespread recessions.
Mexican lawmakers have already ratified the United States-Mexico-Canada Agreement (USMCA), after leaders from Mexico, the United States and Canada agreed on terms in November. Mexican President Andres Manuel Lopez Obrador said in August that he expected the United States to follow suit this month.
In July, U.S. President Donald Trump said he would pursue a trade agreement with Brazil, suggesting a friendly relationship with Bolsonaro could help lower trade barriers between the two biggest economies in the Americas.
Mexico’s economy ministry did not immediately respond to a request for comment on the Brazil talks.