MercoPress. South Atlantic News Agency

Mercosur-EU seek “creative” mechanisms.

Mercosur and the European Union agreed to set October 2004 as the deadline for the completion of a free trade accord, following the latest bilateral meeting held this week in Brussels.

With the backstage of the recently collapsed World Trade Organization Mexico talks and the aggressive approach of United States regarding the Free Trade Association of the Americas, FTAA, Mercosur and EU negotiators acted with more flexibility and commitment after months of stagnation.

In this framework the four Trade and Foreign Affairs delegates from Mercosur country members met with EU Trade Secretary Pascal Lamy and Chris Patten EU Foreign Affairs Commissionaire and agreed on a round of six bi-regional meetings beginning early next December and ending in October 2004 with a full ministerial summit in Europe when hopefully the deal will be concluded.

Although the stumbling block continues to be agriculture with Mercosur pressing for a greater participation in the EU market, Mr. Lamy admitted "creative" market access mechanisms in "sensitive areas", but linked to progress in the WTO multilateral negotiations particularly the coming WTO December 15 Geneva meeting that will attempt to rescue the failed WTO ministerial meeting in Mexico last September.

Mercosur will therefore have to find a negotiations format that enables the opening of EU markets, even quotas, in sensitive areas, (i.e. agriculture) but conditioned to a limit if the EU eventually accepts the opening of its economy in the multilateral trade negotiations.

"We agreed to find creative mechanisms such as lower tariffs and changes, for example, in the Hilton (primer beef) quota currently entitled to Mercosur", explained the Argentine delegate Secretary of Commerce Martin Redrado.

The original EU proposal regarding agriculture was extensive to 91% of all products however it left out those that are vital for Mercosur such as meat, cereals, oil, processed foods. With the new "creative" mechanism still to be drafted, access could be less restrictive for such produce as olive oil, dairy, juice, meat and fruit among others.

Brazilian Foreign Affairs Minister Celso Amorim asked for a substantial market access from EU, but said that Mercosur is willing to accept a system of quotas if these are ample enough.

"Although it's not sure we'll finally reach an agreement, having decided on a deadline is very positive. We leave Brussels with a very constructive attitude as to how to address the problem of market access, particularly regarding agriculture, even when we will continue to press on the issue of subsidies", said Mr. Redrado.

"Obviously we have different views on different issues, but there's an authentic political willingness from both sides to continue advancing", indicated Luis Fernando Furlan, Brazilian Trade Minister.

The coming Brussels meeting in December will be followed by a round in Buenos Aires next February, where both sides will attempt to make their concession proposals compatible in time for the official presentation in April in Brussels.

Mercosur negotiators believe that the "FTAA factor" with its 2005 deadline, together with the fact that French born Mr. Lamy will be leaving his post in November 2004 are powerful reasons for optimism in the coming twelve months. Besides, the EU is not satisfied with Mr. Lamy's recent handling of the failed Mexico WTO round and will not accept the loss of a strategic alliance with Mercosur.