Brussels, 12/09/2006 (Agence Europe) - With the Commission no longer hiding the keen interest created by the regional and bilateral agreements concluded since the Doha negotiations were plunged into uncertainty, talks between the European Union and Mercosur (Argentina, Brazil, Paraguay, Uruguay and Venezuela) on a bilateral trade agreement, which have been suspended since the Lisbon failure of October 2004, could be put back on the tracks. Speaking in the European Parliament last week, Peter Mandelson said that negotiations with Mercosur were continuing. Brazil has said it would like talks to be resumed on an improved basis, with a view to an agreement, if possible, before the end of the year. For the moment, negotiations are at a virtual standstill because the demands by the Latin American countries on access to the Community agriculture market are far beyond what the Commission can agree to, and the Europeans feel that the Mercosur offer is insufficient (see EUROPE 9202).
A paper from the Commission's DG Trade to the 133 Committee (on which the Member States' experts sit), says that, in informal contacts with Commission departments since the end of July, Brazil, which currently holds the Mercosur Presidency, has let it be known that Mercosur was ready to make a slight improvement in its offer with a view to possible resumption of talks. These improvements are mainly in - manufactured goods: Brazil proposes to bring the trade coverage in goods to around 88%, compared with 77% in its offer of September 2004, with a more frontloaded dismantling; - the automotive sector: Brasilia would be prepared to offer tariff dismantling in around 12-13 years, as against 18 years in its latest offer, and the inclusion of auto-parts in the liberalisation schedule, and increase the quota beyond the 25,000 units offered in September 2004, but not dramatically either, due to Argentina's resistance (according to the document, “Brazil admitted that the Brazilian automotive industry has become demandeur of an ambitious deal, as they are losing competitiveness in Europe in favour of cars of Mexican origin); - services: an area, nonetheless, in which Brazil has set “red lines” (telecoms, Presidential authorisation by decree approving the establishment of a foreign bank in the country, and cabotage in maritime transport). In the maritime transport area, Mercosur would be prepared to offer the EU a preference only when South American vessels were not available. Mercosur also proposes full liberalisation of processed agricultural products, provided there are longer transition periods for Mercosur than the EU, and a more flexible approach to geographic indications, provided that acquired rights are respected.
In return, Mercosur wants a substantial increase in the size of tariff quotas for the import of their key agricultural products into the EU, and a softening of the attached conditions. In this area, it re-states the requests set out in an unofficial paper put to the Commission in March 2006. The volume of the tariff quotas requested by the South Americans for beef, poultry and rice is three times greater than that offered by the EU in September 2004, five times greater for wheat and four times greater for bananas. Mercosur also requests a 200,000 tonne quota for sugar, even though it accepted in 2004 that sugar would be offered indirectly by the EU, through ethanol (for which Brussels has already set a 1 million tonne quota), given the sensitivity of the product.
The import tariff quotas requested by Mercosur in its March 2006 paper are as follows: beef, 300,000 tonnes (t); poultry, 250,000 t; pork, 20,000 t; mutton, 20,000 t; garlic, 20,000 t; bananas, 120,000 t; maize/sorghum, 3.5 million t; wheat, 1 million t; rice, 150,000 t; ethanol, 1 million t; powdered milk, 35,000 t;, butter, 20,000 t; sugar, 200,000 t; cheese, 60,000 t. The March 2006 paper states too that, according to Mercosur, these quotas should be duty free, increased year on year and implemented immediately. They would be administered by the exporting side and no export ceiling would be applied. For the other agricultural products, the EU would, says the document, proceed to full liberalisation of trade, beginning with the establishment of duty zero tariff quotas. In the veterinary and plant-care areas, a formal mechanism would be set up to regulate such matters as market access, as a first step on the way to an overall agreement. Finally, for geographic indications, Mercosur suggests that protection be given to specific products, provided that acquired rights are respected, generic or usual terms are accepted, only the exact term in the language of the country of origin is protected, and trade with third countries is not affected.