ASUNCION, Paraguay, July 1 (UPI) — The Southern Common Market, known as Mercosur, launched negotiations for an economic partnership agreement with Japan during its summit of presidents this week in Paraguay.

The proposal reflects the bloc’s push for greater engagement with Asia as it seeks to resolve internal differences over trade quotas related to its agreement with the European Union.

Paraguayan President Santiago Peña, Brazilian President Luiz Inácio Lula da Silva, Uruguayan President Yamandú Orsi and Argentine Foreign Minister Pablo Quirno participated in Tuesday’s Summit of Presidents. Also attending were Bolivian President Rodrigo Paz Pereira and Chilean President José Antonio Kast.

During the meeting, the leaders welcomed starting negotiations with Japan and highlighted “the potential of this process to strengthen economic and trade ties between both parties.”

The initiative aims to expand market access for agricultural and industrial goods, encourage reciprocal investment and integrate value chains, according to Infobae.

Japan ranks among Mercosur’s 10 largest trading partners, with bilateral trade reaching $13.7 billion in 2025. The agreement would cover about 400 million people and a combined gross domestic product of $7 trillion.

Peña described the initiative as historic and said Japan is one of the bloc’s main strategic partners.

The joint declaration also confirmed a broader external agenda.

The leaders reaffirmed their intention to conclude a free trade agreement with the United Arab Emirates, highlighted progress in negotiations with Canada, welcomed the entry into force of the agreement with Singapore for Paraguay and Uruguay, and noted ongoing efforts to deepen the trade agreement with India.

The bloc also welcomed progress in negotiations toward a preferential trade agreement with Vietnam, whose first round of talks is scheduled for the second half of 2026 in Buenos Aires.

The summit also brought out internal differences over the agreement with the European Union, whose Interim Trade Agreement entered into provisional application May 1.

Paraguay called for a more equitable distribution of tariff-rate quotas, particularly for duty-free agricultural products exported to the European market.

Paraguay’s Peña said the demand over the allocation of trade quotas “is not a whim,” but “a matter of fairness,” arguing that Paraguay faces higher logistics costs because it is landlocked.

“What is the purpose of a free-trade agreement that reproduces the asymmetries that already exist instead of correcting them? When we talk about quotas, we are not asking for privileges; we are asking for fairness,” Peña said.

The differences center on how to distribute duty-free quotas for products such as sugar, beef, rice and honey.

In the absence of an internal consensus, the current system tends to favor the bloc’s larger economies, particularly Brazil, because of its scale and maritime access, Deutsche Welle reported.

The summit also took place without Argentine President Javier Milei, who delegated his country’s representation to Foreign Minister Pablo Quirno.

Gabriel Puricelli, an Argentine sociologist and international affairs analyst, attributed Milei’s absence to the domestic political crisis triggered by the replacement of his chief of staff and to the president’s ideological differences with Mercosur.

“Milei has a domestic political crisis, and for him Mercosur summits have always been uncomfortable because of his ideological outlook,” Puricelli told the radio program Cara o Ceca.

The final declaration did not resolve the disagreement, but the presidents reiterated their commitment to ensuring that the benefits of trade agreements “fully reach all states parties” and to advancing toward “consensus solutions” for the allocation and efficient use of tariff-rate quotas.