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11/12/2016

Merkel wants hurdles removed to EU-Mercosur free trade pact

Trade & Society

Merkel wants hurdles removed to EU-Mercosur free trade pact

Dilma Rousseff and Angela Merkel [Wikimedia]

German Chancellor Angela Merkel assured Brazil on Sunday (15 June) that she will do her utmost to bring to a successful end the 15-year-old negotiation of a free trade deal between the European Union and South America’s Mercosur trade bloc.

Merkel, stopping in the Brazilian capital on her way to see the German soccer team play in the World Cup today said Germany and Brazil, the two largest economies in Europe and Latin America, had much to gain from more trade and investment.

“We have a lot of interest in reaching a free trade agreement between Mercosur and the European Union,” she said in a statement to reporters after meeting with Brazilian President Dilma Rousseff. “I will do what is possible so that we can take a step forward and overcome the obstacles.”

Merkel and Rousseff discussed expanded cooperation in scientific research and the energy sector, including renewable energy, and joint ventures to increase investment flows.

But freeing up trade flows between the two countries has been held back by the drawn-out negotiations of a free trade accord between Europe and the Mercosur trade bloc formed by Brazil, Argentina, Uruguay, Paraguay and, more recently, Venezuela.

Off and on talks have been held since 1999, and were taken up again in 2010 after a six-year freeze. Talks have floundered in the past over European agricultural subsidies and the opening of Mercosur industries to competition from Europe.

“There is no sense in holding discussions if both sides are not ready” and there are no dates for a meeting of European Union and Mercosur negotiators, revealed the EU External Action Service Director Christian Leffler in a recent interview.

In countries like Ireland, farmers fear their meat production cannot compete with the likes of Argentina and Brazil, now the world’s largest beef and chicken exporter.

In the midst of an economic crisis, Argentina has dragged its feet on drawing up a list of European products that would be allowed to enter Mercosur free of tariffs.

Mercosur’s newest member, Venezuela, has been left out of talks with Europe as it is not ready to compete.

Brazil, a regional powerhouse that is seeking more trade to boost its stagnant economy, feels it is being left behind by advances in the negotiation of trade pacts between Pacific nations and between the EU and the United States.

The EU and Mercosur were due to exchange proposals by the end of last year outlining the limits of the duty-free access they are willing to offer in markets ranging from beef to cars to create a pact that would encompass 750 million people and $130 billion in annual trade.

The deadline was extended and the lists are not expected to be exchanged before July, after the World Cup hosted by Brazil.

Background

 The EU and the Mercosur group of South American countries ?(Argentina, Brazil, Paraguay and Uruguay; Venezuela is not included in the negotiations because it is still in the process of incorporation to the group) re-launched talks in 2010, after a long six year freeze.

Last May, Mercosur continued with the drafting of the joint proposal to exchange with the EU for the trade deal, according to what was discusses by the Common Market Group in Caracas, while last month Brazilian foreign minister Luiz Alberto Figuereido announced during a recent visit to Montevideo that negotiations were in the 'final stage' and “we're talking of weeks not months”.

Originally Mercosur was scheduled to make the presentation at the end of 2013 but was forced to suspend it because of internal problems and a reluctant Argentina's proposals were far below the average of the other members, according to diplomatic sources at the time.

Mercosur and EU are all members of the World Trade Organization, and therefore any trade agreement must be compatible with WTO regulations