Panama Strengthens Role in Mercosur with Strategic Ties to Brazil and Official Accession as Associate State

By De Puy & Asociados

Panama’s relationship with Mercosur has entered a new phase following its official accession as an Associate State during the 65th Mercosur Summit of Heads of State, held in Montevideo in December 2024. The agreement, formalized in the presence of leaders from Brazil, Argentina, Paraguay, and Uruguay, made Panama the first Central American country to join the South American bloc. According to the Uruguayan Presidency, the status grants Panama preferential access and cooperation opportunities without the obligation to adopt Mercosur’s common external tariff, giving it flexibility to maintain its independent trade policy while engaging in joint projects on infrastructure, sustainable development, and regional integration.

Building on this milestone, Panamanian President José Raúl Mulino met with Brazilian President Luiz Inácio Lula da Silva in Brasília on August 28, 2025, to advance negotiations toward a free-trade agreement between Panama and Mercosur. The talks centered on investment opportunities in ports, infrastructure, aviation, and tourism, with Brazil highlighting its readiness to support Panama’s integration process. Business leaders accompanying Mulino also explored potential purchases of Embraer aircraft to modernize Panama’s fleet, while agricultural trade was strengthened with new agreements on livestock genetics. Lula, currently holding Mercosur’s rotating presidency, underscored that expanding partnerships with countries like Panama is key to diversifying Mercosur’s external relations and broadening its global economic reach.

Complementing these high-level political efforts, Panama will host an incoming South American commercial mission, led by Brazil, with over 20 business leaders expected to participate. The initiative, coordinated by the Ministry of Commerce and Industries and the Brazil–Panama Chamber of Commerce, seeks to attract private investment by showcasing Panama’s logistics, financial, and services ecosystem. Authorities emphasized the advantages of Panama’s connectivity, including the Panama Canal, Tocumen International Airport, and the Colón Free Trade Zone, which position the country as a gateway to markets in North and Central America and the Caribbean. The mission also aims to leverage Panama’s wide network of preferential trade agreements, particularly with the United States, which provides Brazilian companies access to benefits not available directly through Mercosur.

According to official Mercosur documents, Associate States participate in the bloc’s summits and ministerial meetings, and are included in dialogue and cooperation initiatives, though they do not hold voting rights in decision-making. Panama now joins Chile, Bolivia, Colombia, Ecuador, Guyana, Peru, and Suriname in this category, reinforcing the bloc’s outreach beyond South America. For Panama, the association represents both recognition of its strategic importance in hemispheric trade and a platform to attract investment while diversifying its economy.