MercoPress. South Atlantic News Agency

Argentina ratifies interest in Mercosur, but Brazil wants negotiations now

President Cristina Fernandez says talks must take into account Argentina’s re-industrialization process

The government of President Cristina Fernandez told the business community on Monday that Argentina has an interest in a ‘balanced’ negotiation between Mercosur and the European Union to reach a political, association and trade agreement. However the timetable approach of Argentina does not seem to fit with the rest of Mercosur, mainly Brazil.

“The national government ratifies its interest in advancing in a balanced and beneficial negotiation for both sides”, said the Ministry of Industry in a release, but also recalled the agreement between Mercosur members referred to the different degrees of development.

“The South American block agreement demands from the EU an effective implementation of the Special and Differentiated treatment towards Mercosur, taking into account the existing differences referred to relative economic development between the two blocks”, said the release.

The Argentine Executive ratified its position regarding EU negotiations during a seminar with the Argentine business community to reach a consensus on proposals to be presented at the coming round of talks. The Argentine government has programmed this sort of discussions with different production sectors of the economy until next 15 October.

The purpose is to advance in the elaboration of an Argentine proposal, under the premises agreed among Mercosur members so that they can have effective access to the European market and at the same time preserve the domestic policy tools that will enable the region and Argentina specifically, to continue with the re-industrialization process started in 2003”.

The EU and Mercosur in May 2010 re-launched negotiations for an ambitious association agreement based on cooperation, political dialogue and trade liberalization started in 1999, but which was suspended in 2004 because of lack of advance.

Since then the two sides have held nine rounds of negotiations centred on commercial rules, but still missing the market-access issue. The main difficulty in the exchange of proposals is that Mercosur demands a greater access to the EU for its agriculture produce and the Europeans want more access for their manufactured goods, services and participation in government procurement.

Earlier in 2013, the two sides had agreed to have their respective proposals ready by the end of this year, preferably in September.

However there have been changes because the rest of Mercosur is more urged to start negotiations and has even suggested a two-speed approach to talks with the European Union. On the one side Brazil faces the fall of its special status and low tariff access to the EU since it has been considered a middle class income country, and this becomes effective next January.

Uruguay as a small country has also been longing to reach trade agreements with third parties and is prepared to sign with the EU and apparently the new administration of Paraguay also.

For the EU, Mercosur inclusion of Venezuela, closer to Argentina than to free trade and the suspension of Paraguay from Mercosur did not have a favourable repercussion. Similarly the EU and the US have started talks to reach a trans-Atlantic free trade agreement and similarly on the Pacific basin the project of a Trans-Pacific Partnership is on the move.

Brazil and its business community are also fed up with the ‘strategic patience’ approach towards Argentina and the Kirchners and want an agreement with the US and the EU. “With or without Argentina we must reach an agreement with the EU and the US”, repeats the business community in Brazil.

However this could lead to an institutional crisis and even disappearance of Mercosur if Brazil takes off on its own. But looking back there is a mechanism that was applied by Mercosur, the economic complementation accord 59/2003 signed by Mercosur with the Andean Community, Colombia, Ecuador and Bolivia.

Under this procedure all Mercosur members negotiate and sign a framework agreement to advance in reaching a treaty with the EU, and Brazil can later present a proposal and timetable of possible tariff reductions, with the EU doing something similar. Uruguay and Paraguay can join to the terms or similar ones while Argentina and Venezuela would then not be forced to abide by the timetable although, (if unity of the group is to be respected) at some point would have to join the negotiation process.