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27/09/2016

EU, Mercosur try again to get free trade deal

Trade & Society

EU, Mercosur try again to get free trade deal

Cecilia Malmström and Uruguayan Foreign Minister Rodolfo Nin Novoa [ European Commission].

The EU and South America’s Mercosur bloc agreed on 8 April to make another effort to get talks on a long-stalled free trade accord back on track with fresh offers to be made next month.

Negotiations have dragged on since 1999, coming to a complete halt in 2004 before resuming again in 2010. However, hard times for EU farmers who want special protection for meat, dairy and other produce mean progress could be difficult.

EU Trade Commissioner Cecilia Malmström and Uruguay Foreign Minister Rodolfo Nin Novoa, who holds the current Mercosur rotating presidency, said after a meeting Friday they would exchange market access offers in the second week of May.

They also agreed a schedule for talks during the rest of the year between the European Commission, the EU’s executive arm, and Uruguay which represents Argentina, Brazil and Paraguay.

Venezuela is part of Mercosur but is not taking part in these talks.

Malmström said she was “glad we can now move forward with these longstanding negotiations.”

“Both sides are strongly committed so I trust that the upcoming exchange of offers will allow us to successfully resume these talks towards an ambitious and comprehensive deal,” she said in a statement.

Nin Novoa told AFP the Mercosur “initial” offer would cover 87% of all trade with the European Union and stressed how much it wanted an agreement.

Brussels wants more, however, having asked for 91.5% previously.

Nin Novoa could not confirm that what are described as “sensitive products” — meat, dairy, fruit and vegetables — would be included.

“Such talks are always complex, there are many interests at work … but that is why you negotiate,” he said.

France, the EU’s largest farm producer, has led opposition to cutting the Latin American countries too much slack and EU agricultural ministers meeting Monday are due to discuss the Mercosur negotiations.

Mercosur makes EU free trade offer before French visit

South American bloc Mercosur is offering to open up 93% of its trade to competition from the European Union to seal a long-sought free-trade deal, Uruguay’s president said yesterday (22 February).

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In a document prepared for the meeting, they noted that while Mercosur countries are “world leaders in agricultural markets,” European producers are struggling, hit by declining global demand and sanctions against Russia imposed over the Ukraine crisis.

“In this context, an offer to Mercosur containing quotas on sensitive products would likely be seen as a provocation by the European agricultural sector and could have a ripple effect on all ongoing trade negotiations and in particular the ongoing negotiation with the United States,” the document said.

Commission figures put EU-Mercosur trade in goods at €88 billion in 2015 and noted that EU companies pay more than four billion euros annually in tariff duties.

Background

The EU is currently negotiating a trade agreement with Mercosur as part of the overall negotiation for a bi-regional Association Agreement which also cover a political and a cooperation pillar.

The objective is to negotiate a comprehensive trade agreement, covering not only trade in industrial and agricultural goods but also services and establishment and government procurement, and the improvement of rules inter alia on government procurement, intellectual property, customs and trade facilitation, technical barriers to trade.

The EU is Mercosur's first trading partner, accounting for 20% of Mercosur's total trade in 2013. EU-Mercosur trade in that year was €110 billion.

Mercosur is the 6th most important export market for the EU (2013 data).

Mercosur's biggest exports to the EU are made of agricultural products (43% of total exports) and raw materials (28%), while the EU mostly exports manufactured products to Mercosur and notably machinery and transport equipment (46% of total exports) and chemicals (22% of total exports) [data of 2013].