MercoPress. South Atlantic News Agency

Europe, three times the US.

Mercosur and the European Union will define tariff reductions in the second half of 2001, and in the meantime will begin the implementation of interregional cooperation agreements.

Christopher Patten, Europe's current Foreign Affairs Commissar participating in Brazil in a new round of discussions said that the two blocks were heading, gradually, towards a free trade area, but with no bellicose spirit. "Like any successful negotiation, you give and take, since neither side normally achieves all it seeks; it's a matter of finding an equilibrium point, which is quiet different from a trade war", indicated Mr. Patten.

The III meeting of the Mercosur-European Union Negotiations Committee is currently attempting the approval of common sanitary regulations, that will operate as the legal framework for agricultural trade, the most contentious area between the two blocks. "This doesn't mean we'll reach tariff agreements in the near future, but sooner or later we'll find the equilibrium point", underlined Mr. Patten adding that its' "important we don't squander the thrust of the negotiations".

Mr. Patten indicated that Mercosur was anxious to penetrate Europe's 600 million market but, "we must first agree on quality and sanitary controls, which will also mean a greater competitiveness for the region's production".

Regarding the Free Trade Association of the Americas (FTAA) negotiations, Mr. Patten said he believed they would not interfere with the European Union-Mercosur agreements, since FTAA includes 34 countries, 34 different sets of interests, "besides the fact that Europe's potential for Mercosur is "at least three times that of the United States".

"Wrong fiscal policies"

Mercosur countries should be reducing taxes and increasing public investment to overcome recession, but they are doing "exactly the opposite", warned Uruguayan Wall Street analyst, Arturo Porcekansky during a conference this week in Montevideo.

Mr. Porcekansky, head of the Emerging Markets Department of the ABN-AMRO New York bank admitted that foreign investors, risk assessment agencies and multilateral organisations such as the IMF, made an incorrect and critical evaluation of the region believing recovery was at full ste