MercoPress. South Atlantic News Agency

EU/Mercosur trade talks ‘only after the October election’, requests Argentina

Mrs Kirchner wants no mention of concessions until after her re-election

On request from Argentina advance on EU/Mercosur trade talks will be delayed until after next October’s presidential election, revealed the EU Trade Commissar Karel de Gucht.

The highly sensitive exchange of proposals which is at the heart of the negotiations and the main reason for its previous impasse has seen a repeat.

“Argentina does not want to exchange commerce proposals for liberalizing trade until after the elections”, said de Gutch who nevertheless insisted that “we are still determined to close a deal sometime in 2012”.

Last year when talks were re-launched an understanding was expected to be reached in the second half of 2011.

“Argentina preferred it that way. That is life” admitted de Gutch who said it was natural for governments of certain countries not to make concessions on electoral years since with a free trade deal there will be winners and losers among businesspeople and workers unions.

“Now we have to see if a deal can be signed after October when the Argentine election and before the presidential ballot in France in April 2012”, said de Gutch.

France traditionally has been the country most committed to agriculture protectionism given its vast farming sector and lobbies, and next April will see the first round for the re-election of President Nicholas Sarkozy and most probably a run-off in May.

EU officials admit it’s very hard to see Sarkozy consenting to farm concessions before he has assured (like his Argentine peer Cristina Fernandez) his re-election.

Furthermore the polls are far more generous with the Argentine leader than with Nicholas Sarkozy in spite of his strong leadership.

“We will have to wait a few extra months” admit European officials and even go further, if the Euro confidence crisis continues or becomes too complicated, “forget about 2012”

Brussels apparently is also prepared to wait until after October’s election to try and solve trade differences with Argentina. The EU is “most concerned” with the ‘de facto’ barriers and obstacles imposed by Argentina’s Home Trade Secretary Guillermo Moreno that force companies to a one-for-one export-import dollar.

In practical terms this means that international corporations in Argentina to be allowed imports must guarantee an equivalent dollar sum in exports.

Argentina applies these measures to ensure a trade surplus and to protect local industries and the domestic market, although Brussels is ‘well aware that China and Brazil have already applied mostly successful reprisals’.

One of the instruments under consideration by Brussels is to eliminate Argentina from the list of countries benefited with the General Preference System that allows certain Argentine produce access into the EU with considerable tariff reductions.

In 2007, Argentine exports under this system totalled 1.928 billion US dollars. An estimated 1.200 items from fish, fruit, animal fat, auto-parts are among the benefited by the system which comes up for review in 2014.

De Gutch advanced that the EU is thinking of new criteria for the GPS, to help poor countries and not those now in the “middle class”, according to the per capita GDP rating from the World Bank. And since several emerging economies, such as Argentina and Brazil, have grown strongly in recent years, “they are no longer catalogued as poor”.

“If Brazil is no longer in the system it is because it graduated to the upper category”, pointed out De Gutch who nevertheless argued that with an overall trade deal with Mercosur, all member countries will be far better off than with unilateral GPS accords with the EU.

But the task ahead even when elections are cleared is not easy: the EU does not accept reducing farm subsidies in a bilateral relation fearing it could loose ground and protection with the US. This could happen if it lowers tariffs and expands quotas for beef and other farm items from Mercosur.

The South American block is also reluctant to lower tariffs on industrial goods, to make the services sector more accessible and to eliminate the “buy domestic” in the bidding processes where European corporations participate.

The EU is also demanding law protection for foreign investments in Mercosur; safeguarding origin denominations for food and beverage and abidance of the international patents system particularly in pharmaceuticals. A long road still ahead…