MercoPress. South Atlantic News Agency

Mercosur-EU talks “virtually paralyzed”

Argentina finally admitted that negotiations for a free trade agreement between Mercosur and the European Union are virtually paralyzed and only a political understanding at the highest level could get the process rolling again.

"The presidential summit convened last week by President Nestor Kirchner and German Chancellor Gerhard Schroeder is vital for politically solving the negotiation issue this year", indicated Argentine Foreign Affairs Minister Rafael Bielsa.

The purpose of the summit is to consider the negotiation process at "political level, where the methodology and horizon can be worked out, and therefore reach an agreement by the end of 2005", added Mr. Bielsa.

The "4+4" summit could take place before the ministerial meeting agreed last week in Brussels between EU Trade Commissar Peter Mandelson and Paraguay's Foreign Secretary Leila Rachid. Paraguay currently holds Mercosur's chair.

The four Europeans would be: French president Jacques Chirac; British Primer Minister Tony Blair, German Chancellor Gerhard Schroeder and Spanish president Jose Luis Rodriguez Zapatero, and the four Mercosur representatives, Brazilian president Lula da Silva; Argentina's Kirchner; Paraguayan president Nicanor Duarte and Uruguayan president Tabare Vázquez.

However Mercosur diplomats admit that even when a "4+4" meeting could be organized it's not clear how the Europeans would react to the thorny and controversial issue of farm subsides. It is believed Germany and Britain favour their elimination, but Spain and particularly France are a big question mark.

Argentina's International Economic Relations Secretary Alfredo Chiaradia admits that the EU insists in advancing negotiations by "consolidating current (2004) proposals", but Mercosur wants to ratify parameters agreed last December in Rio do Janeiro.

Last December "principles criteria" were agreed including the recognition of special and differential treatment; that trade actually expands at both ends and the elimination of export subsidies.

Apparently EU favours both sides submitting each side's best proposal for discussion and advance from then on to the overall treaty discussion. Mercosur believes it's more prudent to establish a preliminary accord over agenda issues, and then advance along those parameters.

"If not, what happens is we have the same proposals, with cosmetics, a new frustration, no progress and the overall relation deteriorates", said Mr. Chiaradia who nevertheless believes a ministerial meeting is needed to set the "context ground rules".

A tentative date could be May 26/27, during the EU and Rio Group representatives meeting in Luxemburg.