Argentine President Javier Milei will host Mercosur heads of state in Buenos Aires this week as he continues his campaign to liberalise what he considers the regional trade bloc's restrictive regulations. The summit, scheduled for July 2-3 at the Palacio San Martín, brings together leaders from Argentina, Brazil, Paraguay, and Uruguay, alongside representatives from associated states and international organisations.

The spotlight will focus on interactions between Milei and Brazilian President Luiz Inácio Lula da Silva, who is set to arrive in Buenos Aires on the evening of July 2. According to La Nación, Lula's tight schedule will only permit participation in the July 3 presidential summit before departing to host the BRICS summit in Rio de Janeiro, disappointing expectations from Cristina Kirchner's party that he might visit the former president, who is currently under house arrest.

Despite official optimism predicting a cordial summit, Brazil arrives with proposals that clash sharply with Milei's libertarian worldview, including the creation of a "green Mercosur" and enhanced human rights policies. The leaders also diverge on Middle East policy, with Milei supporting the US and Israel while Lula advocates diplomatic restraint and a more neutral position. Paraguayan President Santiago Peña is aligned with Milei, while Uruguay and Brazil remain critical.

On the economic front, Milei has promoted regulatory reforms to unlock free trade agreements, particularly seeking a trade deal with the United States—even if that came at the cost of withdrawing from Mercosur—though the US has shown little interest in such a bilateral agreement.

This summit represents a critical test for Milei's regional diplomacy as he attempts to reshape Mercosur while managing strained relationships with key partners. The outcome could determine whether his liberalisation agenda gains traction or faces continued resistance from traditional allies, potentially complicating Argentina's integration strategy at a time when economic diversification remains essential for the country's recovery.