Brasilia, 06/11/2000 (Agence Europe) - The 3rd round of the negotiations on the association agreement between the EU and the Mercosur, which will start this Tuesday 7 November in Brasilia, will test the will of the two parties to move forward towards a liberalisation of trade. The presence of European Commissioner for External Relations, Chris Patten, and of a significant European negotiator delegation made up of 40 people (see EUROPE of 1 November, p.7) have already been seen as an encouraging sign, notes a Brazilian diplomat. Another positive sign for the Mercosur: the Commissioner noted, last week in Madrid, that the negotiations will not move forward without European concessions in the agricultural sector (see EUROPE of 4 November, p.10).
The Mercosur favours that the draft agreement be sufficiently advanced during the second EU/Latin America Summit taking place in 2002 in Madrid. The European objective is to close the negotiation at the latest in 2005, deadline for the negotiation of a free trade agreement for the whole of the American continent promoted by the United States. The negotiation mandate given to the Commission foresees that the scope of the agreement will enter into force at the same time and that the negotiations will not be concluded before the end of the new WTO round. However, the failure of Seattle modified the content and the timetable seems less precise then previously. In the best case scenario, the liberalisation will not be completed before 2010, or even 2015 for agricultural products, feels the Institute for EU/Latin American relations, Irela, based in Madrid.
During this second to last meeting before the start, in July 2001, of the tariff negotiations, the two parties will trade negotiation document, specifying the general aims of the negotiation in each sector. "The aim is to move forward sufficiently to arrive, in July, with at least one draft agreement for each sector", hoped the Mercosur negotiator. Nevertheless, the works progressed until now and the last negotiating session that took place in June is seen as a failure by the two parties. "The Mercosur countries are not technically prepared for the negotiation and are not sufficiently coordinated", assures the European side. "For the time being we cannot speak of the same things and the negotiations turn towards deaf dialogue", complains the Mercosur.
Preparatory document bring differences over guidelines to fore
The EU insists among others on the issues of public markets or recognition of "appellation d'origin" (certificates of origin" in the wine and spirits sector, while awaiting the negotiations one services to which it holds. While awaiting to broach the core issue of agriculture, dear to Argentina, especially, the Mercosur would like to develop cooperation in the competition and customs structures in particular. In view of the agricultural negotiations, the EU should prepare bilateral hygiene services agreements with each country in the Mercosur (the talks are underway for some years with Argentina).
The working documents of the two parties for this session remain very generous. The European presented at the end of October a fifteen page working document identifying the 'key elements" that will have to be tackled by the three working groups established at the start of the negotiations. The Mercosur had already presented its position in June.
- Trade in goods: 1) customs duties and taxes: the EU is proposing that, firstly, a group of experts be established to ensure the compatibility of EU nomenclatures and those of the Mercosur. The future agreement will ensure the elimination of other taxes on imports and exports and ban the introduction of new measures of this kind. 2) non-tariff measures: according to the EU, the agreement should ensure the elimination of quantitative restrictions as well as non discrimination by fiscal and regulatory measures. Exemptions specified by the agreement could be authorised, for example, in cases of problems in balance of payments, important point for the fragile financial economies of the Mercosur, 3) safeguard measures etc.: the EU hopes that the agreement specifies under which conditions the exporters could be limited for problems of supply (case that is presented in the case of the export limiting system for skins and leather from Argentina, criticised by the EU), and set the "conditions" for the implementation of safeguards or compensatory duties. The Mercosur hopes that the transitions safeguard measures are also defined. Sliding among others into this chapter is the issue of agricultural subsidies, feeling that "the subsidies that directly or indirectly effect the goods traded, will have to be the object of rules for their elimination as of the start of the liberalisation process", 4) rules of origin: the European and Latin American documents stipulate that the agreement will specify the general provisions, as well as the concept of "product origin", cumulation of the origin of goods, development of a product, the minimum number of operations, etc., as well as provisions concerning territorial requirements, proof of origin and administrative procedures; 5) customs: the EU believes the agreement should establish cooperation in the customs field, rapprochement between customs systems (structures, the way they function, etc.) as well as the adoption of a single administrative document and simplified formalities. Mercosur also insists that systems should be computerised and transparent mechanisms should be set in place for the allocation of import licenses; 6) norms, technical regulations and conformity: the EU suggests that the agreement should reduce the differences of technical approach in the implementation of international norms, mainly through cooperation and the diffusion of "best practices", as well as greater transparency in regulation systems; 7) phytosanitary rules: while the European document leaves this aspect to one side, Mercosur specifies that the parties should negotiate bilateral agreements on the recognition of certifications and assess the likelihood of a single agreement. It also insists on: the setting in place of recognition mechanisms of regions free of some diseases; notification of health measures; and risk analysis on a scientific base; 8) wines and spirits: the EU believes the agreement should cover questions of geographic indication (the French mainly target the Brazilian "conhaque"), traditional terms and wine producing practices, as well as a dispute settlement procedure concerning phytosanitary aspects.
- Services, investment and intellectual property. 1) Services: by July 2001, when this question will begin to be tackled, both parties should have specified the current conditions for access to their services market; 2) Movement of capital: the EU considers that both parties should guarantee there are no payment restrictions and that capital movements are liberalised, "without being detrimental to the existing international agreements". A "standstill" clause should make it compulsory for both parties not to introduce new restrictions. The agreement would also specify exceptions and safeguard clauses in the event of balance of payments problems; 3) Intellectual property: According to the EU, the agreement should make it possible to identify the current instruments and their scope, and establish cooperation in this field. Mercosur simply stipulates that the agreement should preserve the highest level of protection, in the context of international rules.
- Other commercial disciplines. 1) Public procurement: the EU considers the agreement should open access to public procurement markets on a non-discriminatory basis at central and "sub-central" levels. Such coverage would pose problems for Brazilian regions in particular, as was the case during negotiations with the Federal State of Mexico. "No sector should be excluded out of hand", states the EU, citing the "provision of work and services" in the water, energy and transport sectors; 2) Competition: The EU and Mercosur propose to establish cooperation mechanisms, including the definition of anti-competitive activities, information on notification and decisions, and a confidentiality and technical cooperation clause. Mercosur goes further by proposing a specific cooperation agreement on competition, after the model of those concluded by the EU with Japan and the United States. The European Commission's competition services, however, do not seem to have made this a priority; 3) Dispute settlement mechanisms: the EU considers this mechanism will only cover issues directly linked to the agreement, which will specify the scope, the timetable and the rules for dispute settlement. Mercosur does not, for its part, rule out the use of existing multilateral and regional dispute settlement mechanisms, "including the WTO".
