MercoPress. South Atlantic News Agency

EU-Mercosur talks in Rio

The European Union has proposed trade negotiations with Mercosur be split into two phases: first a definition of basic rules and then market liberalization.

This will be the EU official position in the coming round of talks to be held next week, July 23rd. in Rio do Janeiro and so it was anticipated in a ten pages letters by . Europe's Trade and Foreign Affairs Commissars, Pascal Lamy and Chris Patten, addressed to the four members of the block, Brazil, Argentina, Paraguay and Uruguay.

Brazilian diplomats said this is the first time Brussels makes official its intention to sit and negotiate market access only once Mercosur has common rules.

"The message is quiet clear, you want an agreement, then you must organize Mercosur", added the diplomatic source.

Following the Argentine crisis, the Community is convinced Mercosur must be strengthened with common rules, regulations and policies extensive, to its four full members.

"Basic common rules for specific understandings in services, government purchases and investments are essential before addressing the second phase which is a full trade commitment by both blocks. A negotiation between similar entities, a customs union Mercosur built on the original lines of the European Community", would be the ideal anticipated Karl Falkenberg the European official head of negotiations with Mercosur.

In the second phase, or even simultaneously if the first phase gets going, "we are willing to begin seriously talking about tariff reductions, but Mercosur must be more willing to open markets", added Mr. Falkenberg.

"Our access to market initiative covers 90% of trade between the two blocks, while Mercosur covers only 40%", explained Mr. Falkenberg.

Analysts believe the European Union could be willing to discuss partial trade liberalization under the "quantitive restrictions" or quota systems in the coming Rio meeting.

However Brazil has reacted saying that to launch a free trade area "all must be negotiated at the same time, rules and market access".

Brazilian Under Secretary for Economic, Trade and Integration Affairs ambassador Clodoaldo Hugueney remarked that "Brazil does not accept splitting negotiations with Europe in two phases".

Ambassador Hugueney added that Brazil is willing to reconsider its offer regarding market access for European industrial products, as long as Europe does the same, including produce from Mercosur agriculture.