MercoPress. South Atlantic News Agency

Argentina proposes gradual elimination of Mercosur double charge common tariff

Foreign Affairs minister Luis Almagro

Argentina proposed the gradual elimination of the Mercosur Common External Tariff, AEC, double charge and hopes the initiative will receive a first approval before Buenos Aires has to turn over the rotating chair of the trade group to Brazil next August.

Uruguayan Foreign Affairs minister Luis Almagro said the proposal is to eliminate the AEC double charge “in three steps: first for those goods with no transformation; a second for goods that already pay 2% to 4% and finally for the rest of the tariffs universe”.

Almagro admitted that the elimination “has to be gradual and besides we must be aware it’s something which we can’t solve in a brief period of time”. However it seems difficult it can be achieved before the Mercosur August 3 summit scheduled to take place in Buenos Aires, particularly since Paraguay wants to make sure it collects its share of revenue from a ‘potentially unified’ Customs duties.

According to current Mercosur procedure any good introduced to any country member must pay the AEC at that country’s Customs, and if it is re-exported to any other country of the block, it must again pay the AEC at the second country.

The elimination of the double charge is essential for any negotiations between Mercosur and the European Union, since the EU has anticipated it would not accept a trade agreement which does not effectively eliminate the double levy.

Uruguayan minister Almagro gave details of the Argentine and Paraguayan positions during hearings at the Senate Finance Committee which is discussing the issue and the common Customs Code.

“We’ve reviewed basically certain issues related to Uruguay’s position in Mercosur”, reported Almagro following the closed session meeting.

Argentina’s carrot-concession to its Mercosur members pretends to make viable in the Customs Union an article allowing any member country to impose export duties on its foreign sales. These taxes (on windfall earnings from soaring commodities prices) have proved to be crucial revenue for Argentina’s Treasury and therefore the Kirchner couple’s administration insistence.

However Uruguay and Brazil object such an initiative.

Legalizing export duties “is a red line which we have drawn and will not cross” minister Almagro confirmed to the Uruguayan Senate committee.

Finally opposition Senator and former Foreign Affairs minister Sergio Abreu underlined that Uruguay must insist in claiming flexibility from Mercosur to establish unilateral trade and cooperation talks with third parties.

However Walter Cancela, Director for Integration Affairs and Mercosur from the Foreign Affairs ministry revealed that “there are no interested parties in establishing trade negotiations with Uruguay”.