Brussels, 15/04/2004 (Agence Europe) - Negotiators from Europe and Mercosur countries (Argentina, Uruguay Paraguay, Brazil) are due to exchange their new offers for a future association and free trade agreement on Friday. However, on Thursday negotiators are not ruling out that the presentation of the offers might be postponed.
Mercosur was ready and waiting for the new EU agricultural sector offer, the star attraction in their eyes from the agreement under discussion since October 1999. Trade Commissioner Pascal Lamy announced at an EP hearing that the Commission is prepared to make concessions, even if this triggers "some fits" amongst Member States (see EUROPE 7 April p. 9). In principal, the Commission is free to present these offers without the prior agreement of Members States in the "133" committee, under the framework of its Council mandate. The Commission was however reassured on Wednesday that Member States had "naturally been consulted".
Amongst the sensitive products concerned, Commissioner Lamy quoted sugar (particularly in the form of ethanol) beef and "possibly cereals". Mercosur is counting on a better offer for poultry meat, dairy products olive oil and wine. Concessions should take the shape of a lower customs duties and larger tariff quotas.
The sugar question has taken centre stage until now, and met with strong lobbying from European producers who fear the beginnings of the ACP reform announced by Commissioner Franz Fischler (see EUROPE of 14/04/04 p.15) and also from Brazilian producers. Mercosur negotiators are also under pressure from rice producers. Mercosur is set to have exported over a billion tonnes of rice in 2003/2004. Deputy Trade Minister for Paraguay, Miriam Segocia, indicated to the EFE agency last week that Mercosur hopes to obtain new preferential tariffs for meat sugar and soya. She also hopes for an improvement in the European import quota for "Hilton Beef" (the current annual quota for Paraguay is 1,000 tonnes).
The European Union is keen to secure better offers in public procurement from Mercosur, blocked until now by Brazil. Progress in intellectual property is also difficult, linked by Mercosur countries to technology transfer and industrial policy issues. However, negotiations on services and investment seem to be making good progress. The Brazilian Foreign Affairs Minister announced this week that he is prepared to offer the EU better access to the local telecommunications market and financial services. Access to the maritime transport market remains problematic.
The aim of the negotiators is to reach a fairly comprehensive package at the EU/Latin America/Caribbean Summit on 28 & 29 May in Guadalajara and close talks in October. Argentina and in particular Brazil seem to have given higher political priority to EU talks, after the deadlock in early April of negotiations on the Americas free trade area due to result in the opening up of markets throughout the American continent in 2005.
In an interview with the Figaro in Early April, the Brazilian Foreign Affairs Minister Celso Amorin assured that "the details cannot be sewn up in time for the Guadalajara Summit, but by October, I am confident." "We will probably have to ask for more that the EU will offer in agriculture. By the same token the EU will probably ask for more in another areas. On both sides there is a will to avoid the most delicate questions, which will lead us to concentrate on that which is manageable" he said. The Minister believes that the EU/Mercosur agreement will have a fundamental impact on multi-lateral WTO negotiations. "What the US is prepared to accept at WTO will depend on Europe's position and vice-versa" he added. He rejected however the idea that by upping its offer at Mercosur, the EU could break the G20 front, headed by Brazil at the WTO Ministerial meeting in Cancun. "The US and Europe can try as they might, they won't manage to break our alliance" he stated.
The Brazilian press indicated that according to "diplomatic sources", European and Mercosur negotiators had scheduled a friendly football match in October to celebrate the end of talks.
Mercosur and the Andean community have recently signed an agreement to create a free trade area as of next 1 July set to gradually abolish customs duties over 15 years.