MercoPress. South Atlantic News Agency

EU-Mercosur: October still distant.

Mercosur and the European Union are facing growing difficulties in the current trade negotiations to reach the October commitment agreed by both sides.

Taking advantage of the United Nations cooperation, trade and economic development conference UNCTAD, being held in Sao Paulo, Brazil, Mercosur and EU representatives have been trying to advance in some of the most conflicting issues such as agriculture, services, government procurement and investments.

However after this Monday's meeting that extended for three hours and a half, (two more than scheduled), the Brazilian Foreign Affairs Minister Celso Amorim said "we advanced a lot in services, but progress was minimal in agriculture".

But EU Trade Commissar Pascal Lamy had another insight, "in services, government procurement and investments and industrial tariffs, we advanced".

Actually these are the issues the EU is pressing for, while agriculture is Mercosur's main claim.

Regarding services, Mercosur's offer includes legal guarantees for investments, but apparently the EU pretends more and according to Mr. Amorim "we are in no position to introduce five constitutional amendments and 23 bill reforms to comply with EU requests".

An EU source indicated that the Mercosur investments proposal has "one page of offerings and four of exceptions".

Mr. Lamy also insists "much still has to be done regarding government procurement".

The EU Trade Commissar admits difficulties from both sides regarding market access. The original EU offer was a ten year opening process involving 87% of agricultural commodities. For the rest Mercosur would have to accept quotas and lesser tariff reductions. For industrial goods access would cover the whole spectrum, but Mercosur proposed an opening for 87,8% of bilateral trade, which now stands at 90% following last week's round of talks.

"We want a significant and important agreement, not a "light" agreement", insisted Mr. Amorim who also rejected the EU's two pronged proposal, one now and a second after the conclusion of the World Trade Organization Doha round.

And following with its negotiation strategy, Mercosur not only has ongoing talks with the United States for a Free Trade Association of the Americas, next July delegates from the South American group will be sitting with China to discuss about tariff preferences.

EU and Mercosur representatives have repeatedly committed themselves to reaching a full trade agreement by next October in time for the 2005 deadline.