Intense technical and political discussions between the EU and Mercosur countries on the fringes of the WTO ministerial conference that finished in Buenos Aires on Wednesday 13 December allowed progress to be made but the signing of an agreement in principle will have to wait until early 2018 at the earliest.
A Brazilian source said that Mercosur made new concessions on Tuesday to which the EU had reacted positively but it says it won’t be able to make a reciprocal offer immediately and it would be better to wait until next year.
Mercosur made its final offer this week agreeing to increase its revised tariff offer from 89% to 90% of its tariff lines as desired by the EU, which will offer 92% tariff liberalisation.
We have promised to offer up to 90% tariff liberalisation and we will do so, said Brazilian trade minister Aloysio Nunes on Tuesday 12th December.
Mercosur has agreed to liberalise two thirds of the 90% of tariff lines over a period of only 10 years. In addition, Mercosur has agreed to reduce its tax on car imports from 35% to 2.66% over a 15-year transition period but the EU is demanding a 10 year transition period. Mercosur has agreed to open an import quota for hybrid vehicles, says a Brazilian source.
When it comes to agriculture, the EU is reported to have accepted to offer tariff-free access to its tobacco market. Paraguay, which imports European whiskey duty free, is reported to have made a major concession by agreeing that other Mercosur countries may also import duty-free.
The EU will now study the Brazilian proposal very positively but they have a more complex consultation mechanism, said Nunes on Tuesday.
Argentina and Brazil want to announce a political agreement this year. Argentina wishes to do this on the fringes of the WTO ministerial conference and Brazil at the Mercosur summit on 21 December. They both did not attempt to hide their frustration, explained the South American source.
Under pressure from its member states however the EU does not want to rush into anything and has the aim of reaching an agreement in principle in early 2018, before the general elections in Brazil in October.
As we were going to press, there were rumours of a ministerial EU-Mercosur statement confirming their commitment to reach agreement. (Original version in French by Emmanuel Hagry)