EU Talks with Mexico, Mercosur Push On For 2018 Trade Deals

18 January 2018

Trade negotiations between the EU and a number of Latin American countries are picking up in the new year, with officials aiming to clinch an updated EU-Mexico agreement and a long-waited EU-Mercosur accord in the near term.

EU-Mexico talks have already resumed, with negotiators meeting last week in Mexico City to advance the process. The two sides had attempted to finish the trade deal update last year, only to confirm after the final negotiating round in December that they would need more time. (See Bridges Weekly, 7 December 2017)

After that meeting, held from 12-21 December, EU Trade Commissioner Cecilia Malmström said that the negotiating teams would need to do additional work in early 2018, “aiming for a deal that is right, not any deal.”

“As I’ve said before, quality must come before speed, and this is a goal shared by our Mexican partners,” Malmström added.

Similarly, EU-Mercosur negotiations did not lead to a political deal during talks held in mid-December on the sidelines of the WTO’s Eleventh Ministerial Conference in Buenos Aires, Argentina. (See Bridges Weekly, 7 December 2017 and Bridges Daily Update, 13 December 2017)

“We have made good advancement but there’s still stock taking today,” Malmström said after the Buenos Aires meeting, according to Reuters. “We see the end of this,” she added.

Also on the docket is a planned modernisation of the EU’s trade accord with Chile. The 28-nation European bloc will also be working on the ratification processes for trade agreements with Singapore and Japan this year, while also navigating the next phase of the Brexit talks.

Updating the EU-Mexico deal

At a December round, EU and Mexican negotiators discussed all areas of the agreement, and the talks “resulted in very good progress,” according to the European Commission’s statement.

These advances reportedly included wrapping up their work on competition, good regulatory practices, small and medium-sized enterprises (SMEs), transparency, sanitary and phytosanitary (SPS) measures, and trade and sustainable development. Discussions also included revised market access offers for goods, though that process is still ongoing.

The original trade deal, now nearly two decades old, is a part of a “Global Agreement” covering various areas. (See Bridges Weekly, 27 July 2017)

“As well as the economic benefits, the agreement is also a way to tie our citizens closer together and to confirm our shared values on sustainable development, labour and environmental rules, human rights, and our objectives on climate change. We will also have for the first time a chapter on how to tackle corruption in the public and private sectors – something which is relevant for trade of course,” said Malmström in a statement last month.

However, clinching a final deal requires decisions on sensitive issues, including agricultural market access on meat and dairy; rules of origin, including with agriculture; and geographical indications, among others.

The Mexican Secretary of Economy Ildefonso Guajardo Villarreal mentioned “high sensitivity” on meat as one of the factors slowing down progress.

“What is the matter? A high sensitivity on meat and an excessive obsession on entering the dairy market. We are working to see what can be achieved. We are moving forward and hope to reach a conclusion and an agreement in early February,” Guajardo said to El Universal, a Mexican news outlet.

The debate over geographical indications partly involves the EU proposal to protect nearly 60 cheeses originating from the bloc, which Mexico also produces. Various members of the Mexican dairy industry have reportedly lobbied against these geographical indications, which would prevent them from selling cheeses such as manchego and parmesan produced locally under those names.

Meanwhile, the EU and Chile are set to continue talks to modernise their existing trade accord, which were launched last year. Chile and Mexico are both members of the Pacific Alliance, a Latin American coalition which also includes Colombia and Peru, which also have deals in place with the European Union. (See Bridges Weekly, 23 November 2017)

Eyeing EU-Mercosur agreement

Meanwhile, officials from the South American bloc Mercosur and the European Union are also expected to resume negotiations shortly, after efforts to clinch a long-awaited deal came close to conclusion last year, only to falter on differences such as market access for beef and ethanol.

The four full members of Mercosur are Argentina, Brazil, Paraguay, and Uruguay. Meetings are expected to resume in the coming weeks.

The EU had proposed in October to provide tariff-rate quotas of 600,000 tonnes of ethanol and 70,000 tonnes of beef per year, an amount that the members of Mercosur argued was not enough. While the bloc put forward a revised offer on goods in December, and Mercosur put forward its own updated offers on goods, services, and government procurement, talks are still ongoing to reach common ground. (See Bridges Weekly, 19 October 2017)

“We have a meeting scheduled for this month, we have to set a date in which we will also be receiving the EU proposal in relation to some outstanding issues, among them those that refer to the agricultural issue in its entirety and the subject of ethanol,” said Paraguayan Foreign Minister Eladio Loizaga to journalists.

The two blocs have been negotiating a trade pact for nearly two decades, though the talks have stalled repeatedly and were re-launched in 2016. The remainder of the pact is said to be well advanced, with a report from the European Commission on the 29 November-8 December negotiating round which preceded the Buenos Aires talks noting that chapters such as dispute settlement, SPS, services and establishment, and trade and sustainable development are either finished or close to being complete.

ICTSD reporting; “EU, Mexico Pushing Ahead With FTA Talks,” GLOBAL TAX NEWS, 2 January 2018; “Names of cheeses are obstacle in trade talks,” MEXICO NEWS DAILY, 4 January 2018; “Plantean a la UE abrirse a agroproductos mexicanos,” EL UNIVERSAL, 13 January 2018; “Guajardo ve obsession European de vender quesos en Mexico,” EL UNIVERSAL, 10 January 2018; “EU trade in 2018: A preview,” EURACTIV, 8 January 2018; “EU stalls on new Mercosur trade offers, delaying deal: source,” REUTERS, 12 December 2017; “Mercosur y la UE se reunirán en Asunción este mes,” EL PAIS, 12 January 2018.

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