MercoPress. South Atlantic News Agency

EU top official visits Uruguay/Paraguay to advance trade talks with Mercosur

Trade Commissioner Karel De Gucht is expected next week in Paraguay

The European Union Trade Commissioner Karel De Gucht will travel next week to Paraguay and Uruguay to reinforce bilateral relations and to advance on the ongoing EU/Mercosur negotiations to reach an overall trade and cooperation agreement.

De Gutch is scheduled to visit Paraguay and Uruguay, 7 to 9 February where he will meet presidents Fernando Lugo and Jose Mujica according to EU sources. Paraguay currently holds the Mercosur pro-tempore chair.

“Given the economic dynamism of Mercosur, and of Paraguay and Uruguay with their record growth in particular, I see considerable opportunities for EU exporters, investors and service providers in this region in the coming years”, said Commissioner De Gucht.

“A balanced and ambitious free trade agreement between the EU and Mercosur could therefore bring substantial economic benefits to both sides and contribute to the economic recovery” added the EU official.

EU and Mercosur resumed trade and association talks last May --following six years of suspension starting 2004— and have since held a round of negotiations with the next scheduled for March in Brussels.

Among the main obstacles to advance negotiations is the agriculture chapter since EU farmers, particularly breeders, fear competition from their efficient Mercosur peers that dominate several items of the world meats’ market. EU on the other hand is pressing for more industrial and services opportunities in Mercosur.

EU describes Mercosur as “a relatively protected market, both in terms of tariffs and non-tariff barriers: the average rate of applied tariff protection is around 13% (average bound protection is above 30%), but protection in sectors of particular interest to EU exporters is even higher (e.g. 35% for cars)”.

Mercosur made up of full members Argentina, Brazil, Paraguay and Uruguay, plus Venezuela in the process of incorporation, and Chile and Bolivia as associates, is one of the EU main trade partners. In terms of EU exports, the South American block ranks on a par with India and ahead of both Canada and Korea. Over the past four years until the crisis hit, EU exports to Mercosur increased by more than 15% annually.

Furthermore EU investments in Mercosur amount to more than €181 billion, higher than all EU investments in China, India and Russia combined.

Total Mercosur GDP is €1300 billion, superior to that of countries like South Korea, India or Russia. In 2010, Mercosur GDP growth rate exceeded 7%.

The EU-Mercosur trade part of the Association Agreement aims to: be comprehensive and ambitious, going beyond the respective WTO obligations of both sides; extend coverage of products and services to be liberalized. Product and sector sensitivities on both sides will be taken into account. Cover not just goods, but also issues such as services, investment, government procurement and trade and sustainable development.

Ensure adequate protection of intellectual property rights and geographical indications, effective competition policies and a special agreement on sanitary and phytosanitary standards. Finally establish an effective and binding dispute settlement mechanism to help resolve trade frictions in the EU-Mercosur relationship.