MercoPress. South Atlantic News Agency

EU official optimistic about the next round of trade negotiations with Mercosur

Gustavo Martin Prada, head of EU Latin American desk

The European Union and Mercosur have a clear commitment to advance trade negotiations and conclude a deal, if possible, by the end of the year, if not at the beginning of next year when Argentina will again hold the rotating chair of the South American group.

The EU head of the Latin American desk and former EU ambassador in Argentina Gustavo Martin Prada currently in Buenos Aires for the first meeting of the EU/Argentina bilateral mechanism added he was looking forward to next month’s EU/Mercosur round of negotiations in Paraguay because he believes “there will be a concrete exchange of proposals”.

“It’s not a simple exercise but we are optimistic that proposals from both sides will be on the table. It’s a crucial moment for the eleven-year negotiations”, said Prada who downplayed some of the threats in the EU and in Mercosur to the advancement of discussions.

The obstacle enumerated include the EU Parliament and several countries, led by France, that condition any deal with Mercosur to European farmers’ well being; growing protectionism on both continents; the EU disappointment with Argentina’s non automatic import licences and Brazilian manufacturers growing fear of outside competition because of their overvalued currency.

“There’s a significant link between EU/Mercosur and Doha. Since the Doha round does not advance we have a window of opportunity, It’s common that certain sectors do not agree or have certain reservations about trade talks. What matters is to have all interests converging on the objective of the trade agreement”, said Prada.

He added that all European institutions are important and have different responsibilities, but “we have taken note of the European Parliament strong statement in defence of farmers but we have a ten year mandate from the European Commission in support of trade negotiations”

Prada also had a contemplative attitude towards Argentina’s obstacles to slow down imports and protect local manufacturing. “We all have difficulties and interests to defend, but countries must abide by WTO rules. We believe Argentina overdid it and that was the message sent at the time. We all wish there were no artificial impediments to trade. At the time we received formal complaints from European companies and we acted. The situation later improved, and further restrictions were imposed, but it does not seem to be an issue at the moment”.

Finally on Brazilian manufacturers and what seems a concentrated EU interest in the Brazilian and to a certain extent the Argentine markets, Prada managed to avoid the minefield.

“The agreement is with the four full members (Argentina, Brazil, Paraguay and Uruguay) and in a near future Venezuela. We are all aware of the significance of the Brazilian market, but it would be a mistake to consider the whole package as merely a trade deal. Besides trade it will be a political and cooperation agreement and all partners are equally important. When in ten years we look back and see the impact of the agreement the most important chapter will be that of investments. Our own European experience has shown as this”, concluded Prada.

Next month in Asunción, capital of Paraguay that currently holds the Mercosur chair, the next round of Mercosur/EU negotiations is scheduled. The last round in Brussels was not as satisfactory as had been expected since it took place under the strong echo of the EU Parliament in support of farmers, Argentina’s trade restrictions and Brazil’s growing impatience with the foreign exchange rate in which manufacturing is trapped and exposed to declining competitiveness.