Argentina's moves to restrict imports and prop up its shrinking trade surplus as well as European farmers resistance to ‘cheap’ meat imports could hurt talks for a trade deal between Mercosur and the European Union, an EU official said on Wednesday.
”Creating new trade barriers are not good for negotiations” said Gustavo Martin Prada, head of Delegation, European Commission in Argentina.
Speaking with reporters in Buenos Aires Prada said the European Union hopes to sign a deal with Mercosur later this year but admits that (‘difficult’) negotiations could extend the timetable to 2012.
In May 2010, the two sides resumed talks that had been frozen for six years with the aim of creating the world's largest free-trade zone with 750 million people and traded goods valued at 65 billion Euros a year.
The last round of talks was held early March in Brussels and the next is scheduled in Asuncion, Paraguay in May.
Mercosur resistances to strict rules on intellectual property and strong opposition from European farmers fearful that cheaper food imports from their South American competitors will swamp their markets are seen as the main obstacles to a deal, pointed out the EU delegate.
Martin Prada said that even when Argentina’s import limits have not significantly hurt trade between the blocs, they could further complicate already difficult talks.
This month, Argentina expanded the number of foreign goods subject to import permits (non automatic licences with a 60-day deadline) by 50%, (400 to 600) angering the country's Mercosur partners Brazil, Uruguay and Paraguay, although bilateral monitoring conditions were later established to help with the normal flow of trade.
The Argentine trade surplus has been narrowing as imports surge due to strong domestic demand and the Peso currency's appreciation in real terms, although February trade data was stronger than expected.
Argentina is supposed to approve the import permits promptly but some importers complain the process can take up to 300 days, amounting to a de facto trade barrier.