Through the pact with the Latin America-based Mercosur bloc, Japan hopes to expand market access for automobiles and other products
Japan and Brazil will begin negotiations on an economic partnership agreement with the South American trading bloc Mercosur, as Tokyo seeks to strengthen ties with the resource-rich region and promote trade.
Japanese Prime Minister Sanae Takaichi and Brazilian President Luiz Inacio Lula da Silva confirmed the launch of the negotiations during a meeting in Evian-les-Bains, France, on the sidelines of the recently concluded Group of Seven (G7) Summit.
Through the pact with the Mercosur bloc, which also includes Argentina, Bolivia, Paraguay and Uruguay, Japan hopes to expand market access for automobiles and other products, apart from diversifying supplies of critical minerals amid China’s recent rare earth export restrictions.
In her opening remarks, Takaichi described Brazil as a strategic global partner that shares values and principles with Japan. Mercosur is an attractive growth market with a population of about 300 million and a combined GDP of roughly USD 3 trillion. It is richly endowed with resources such as critical minerals, energy and agricultural commodities,” said Deputy Chief Cabinet Secretary Kei Sato, while giving out more details about the bilateral meeting.
Brazil, the largest economy in the Mercosur bloc, is also a major oil producer, thereby making the Latin American region increasingly important for Japan’s efforts to diversify supply chains and resource procurement. However, as per Sato, Takaichi is also taking into consideration the concerns raised by lawmakers of the ruling Liberal Democratic Party, who have warned that increased imports of animal protein-related products could end up hurting domestic producers.
“The Japanese government is aware of those concerns and will seek to protect sensitive agricultural sectors during the negotiations,” Sato said.
Apart from Brazil, Japan is looking to deepen its ties with France, with Takaichi and French President Emmanuel Macron meeting on the sidelines of the G7 Summit and discussing cooperation on economic security, critical minerals and advanced technologies.
Meanwhile, Japan’s exports grew for a ninth straight month in May, as a weaker yen, higher commodity prices and solid semiconductor demand offset the drag from major supply disruptions linked to the Iran war.
“Total exports by value rose 17% year-on-year in May, outpacing a median market forecast for a 16.2% increase and following a 14.8% rise in April. By volume, however, they rose just 0.5% last month,” the government data stated.
Exports of electronic components drove overall growth, with the ongoing AI boom pushing up prices for memory chips and non‑ferrous metals. While exports to the United States rose 12.5% in May from a year earlier, the China tally went up by 17.9% as well.
Overall imports grew 12.5% in May 2026, compared with the May 2025 tally. However, the ratio fell short of market forecasts, which predicted a 12.8% increase. The gains were witnessed despite a plunge in crude oil import volumes, as the maritime trade disruptions at the Strait of Hormuz severely raised the prices of crude and other energy products.
With per-unit cost in yen hitting an all-time high, crude oil imports plunged 28.5% in value terms and 57.3% in volume terms. That resulted in the Far East Asian nation running into a trade deficit of 378.7 billion yen (USD 2.36 billion) in May, compared with the forecast of a 564.6 billion yen deficit.
Japan, heavily dependent on imported energy, has faced higher costs following disruptions to Middle Eastern supply routes. In May, crude oil imports from the Middle East tumbled 61.9% in volume terms. Despite the Takaich government securing alternative crude supplies from alternative sources like the United States, they were not being able to offset the impact that was created by the downfall in Gulf tally.
