The effort is tied to the economic significance of these sectors within intra-bloc trade. Roughly half of all trade between Brazil and Argentina, for example, is concentrated in the auto industry. Yet despite its central role, the sector has remained outside Mercosur’s common trade framework since the bloc was created 34 years ago.

“Our goal is to include the automotive sector in Mercosur, and we will continue working toward a regional agreement in this area,” said Ambassador Gisela Maria Figueiredo Padovan, secretary for Latin America and the Caribbean at Brazil’s Ministry of Foreign Affairs, who is leading the negotiations.

Ms. Padovan said the Brazilian government has already drafted a proposal outlining a new common industrial policy for the regional auto sector. “We’ve submitted a draft agreement aimed at establishing a shared industrial policy. Just between Brazil and Argentina, autos account for 50% of bilateral trade—that’s highly significant. We’re pursuing a deal that will be mutually beneficial,” she said.

Negotiations on the sugar industry are still at an earlier stage, with no formal text under discussion. Even so, talks are moving forward, according to Ambassador Francisco Pessanha Cannabrava, director of the Mercosur Department at Brazil’s foreign ministry.

“In the case of sugar, we’re aware of the sensitivities among our Mercosur partners, but our goal is not to harm local agriculture. Our focus is on aligning production chains. Countries like Uruguay and Paraguay have domestic industries that rely on sugar, so we need to find ways to integrate it into the bloc,” Mr. Cannabrava said.

As part of this process, Brazil is considering working with the Inter-American Development Bank (IDB) to help develop technical benchmarks for sugar sector integration. “We’re working on terms of reference to figure out how sugar can be included in Mercosur in a way that’s a win-win for everyone. These terms could be developed by respected institutions like the IDB,” he added.

Brazil’s Foreign Ministry also expressed optimism about reaching an agreement with Argentina on a new version of the Common External Tariff Exception List. The current discussion stems from a proposal made during Argentina’s previous Mercosur presidency, which secured exemptions for 50 new products.