MercoPress. South Atlantic News Agency

EU/Mercosur trade negotiations limited by reciprocal claims of protectionism

The uto industries together with agriculture are two conflicting areas of talks

The European Union/Mercosur trade talks taking place in Paraguay are attempting to advance with a ‘verbal exchange of proposals’ while negotiators continue ahead with technical aspects of a future agreement, according to Argentine sources.

However those same sources admit that both sides are limited in their actions, as happened in the previous round in Brussels, because of recent events involving EU claims of Argentine ‘protectionist’ policies and the strong lobbying from European farmers associations that have had a positive reaction from the EU Parliament and several countries led by France and Ireland.

“It’s a poker game: nor the EU nor Mercosur are in conditions to advance towards an agreement at the moment”, admitted an Argentine negotiator in Asunción.

Two weeks ago the EU Trade Commissioner Karel de Gutch claimed that Argentina’s protectionist measures have become one of the ‘main obstacles’ for an overall trade and cooperation agreement.

Argentina has been applying the non automatic licences system (contemplated in WTO rules) which theoretical delays imports for 60 days, although this is not necessarily the case according to complaints at the time from Mercosur members and the EU.

The EU was specifically targeted a couple of months ago with food and beverage exports to Argentina, a situation which apparently has been overcome.

However Argentina has since begun to demand a ‘dollar for dollar’ import-export policy from different industries. The first to accept these rules has been the auto industry one of the most dynamic manufacturing sectors of the country which is going through a boom of domestic sales and exports mainly to Brazil.

A second industry which has been ‘invited’ to follow this policy has been pharmaceuticals.
Among other sectors, the EU is particularly interested in Mercosur automobile market.

From the EU side the European Parliament ordered a Mercosur imports impact study, some of its conclusions were released Monday in anticipation of the Asunción round of talks and seem to confirm some French and Irish fears about the negative repercussion for the meats sector.

Opening the EU market to Mercosur farm exports “would cause a drastic contraction of EU rural employment and in the processed foods sector industry, in some cases as much as 5% for certain produce”, points out preliminary info from the study.

Another report published in the EU says that world trade of agriculture produce increased 12% last year compared to 2008, and the “EU is the world’s leading importer of food products”.

According to Argentine sources Mercosur will be offering a ‘wide and fair’ proposal including the sensitive ‘industrial sector’ (for Brazil and Argentina), but also expect the EU to reciprocate with an equally ample and fair arch of products to be included in the package of tariffs’ reductions.

Mercosur will also demand that EU gives evidence of its willingness to lower agriculture subsidy levels.

“It’s going to be a long, tough negotiation, but it is better to reach a long term and good agreement rather than an immediate and bad negotiation”, said the Argentine sources.