Uruguay and Brazil could be prepared to go ahead with a 'two speed' trade negotiations between Mercosur and the European Union if the Argentine tariff proposal is not as ambitious as that from the rest of its members, according to Uruguayan diplomatic sources.
Apparently Argentina's tariff reduction proposal is more conservative plus the fact that the government of president Cristina Fernandez does not believe the EU will effectively address its farm subsidies policy.
Mercosur members are supposed to meet this week in Caracas, Venezuela to make compatible the different tariffs reduction policies, and have an only proposal to exchange with the EU but Argentina is dragging its feet, added the Uruguayan sources. Negotiations are headed by Brazil which is anxious to reach an agreement with the EU since as of this year among other things it lost some specific tariff benefits.
Brazil, Argentina, Uruguay and Paraguay are committed to this agreement, said Brazilian foreign minister Luis Alberto Figuereido, who also admits Buenos Aires could be left out of the first round of negotiations. Venezuela the fifth of Mercosur full members is not participating of the negotiations since it has only recently joined the group.
Uruguayan sources also revealed that supposedly this month there is to be a meeting of EU and Mercosur delegates, which has yet to be confirmed.
In February we are supposed to hold the first meeting, if the EU effectively comes up with a proposal, said the sources who anticipated that Mercosur will have its counter proposal ready. The following step is for each side to analyze the other's proposal and decide if it is satisfying.
However if Argentina is not so wide-ranging about its proposal, Brazil and Uruguay have decided they will present something more ambitious to negotiate. In this scheme Mercosur members would then advance at 'two-speeds' in the talks with the EU: on the one side Brazil and Uruguay, and most probably Paraguay, and in the other Argentina.
Last Friday foreign minister Hector Timerman said that the EU subsidies policy to its farmers could lead to a difficult situation to resolve, since one of the objectives of Mercosur is the opening of agriculture markets which remain closed to most of our farm produce, and Europeans enjoy a level of protectionism very much higher than what is acceptable for us.
Timerman made the statements at the end of a meeting with different areas of the Argentine government to address how Mercosur/EU negotiations are advancing and more specifically the Argentine proposal.
We are a bit concerned with the EU delay in finalizing its proposal and with the expressions from several European countries regarding the protectionism they practice in their domestic markets, particularly referred to agriculture, Timerman was quoted.
Following an hiatus of six years the EU and Mercosur resumed negotiations for a trade and cooperation agreement in 2010, but protectionist measures implemented by Argentina and reported to the World Trade Organization, WTO, by the US, EU, among others plus the suspension of Paraguay from the block in June 2012, (following the removal of then president Fernando Lugo), delayed negotiations.
Brazil then revealed that the EU had requested to postpone the meeting with Mercosur for January, and later Brussels demanded from Mercosur to know with 'how many of its members would the negotiations be”.