EU, Mercosur Prepare to Revamp Trade Talks in May

21 April 2016

The EU and Mercosur are set to ramp up their long-struggling trade talks, with officials from both sides confirming plans to exchange market access offers in goods and services during the second week of May.

The news, confirmed in early April by EU Trade Commissioner Cecilia Malmström and Uruguayan Foreign Minister Rodolfo Nin Novoa, has fuelled a renewal of interest – and controversy – over the talks, which were first launched in 1999. Uruguay is the current holder of Mercosur’s rotating presidency, with the South American customs bloc also counting among its members Argentina, Brazil, Paraguay and Venezuela.

Venezuela, however, is not current part of the trade talks, given its relatively recent entry into the Mercosur group. (See Bridges Weekly, 4 July 2012)

Part of a broader effort to set up a region-to-region Association Agreement, the trade talks were re-launched almost six years ago, after having stalled in 2004. Since then, nine negotiation rounds have taken place; however, no formal rounds have been held in over three years. (See Bridges Weekly, 31 October 2012)

The possibility of another re-boot, however, has been the source of significant speculation in recent weeks, particularly in the wake of Mauricio Macri’s assumption of the Argentine presidency late last year. Representatives from both trading blocs have also met repeatedly in recent weeks on the subject. (See Bridges Weekly, 24 March 2016)

“Both sides are strongly committed, so I trust that the upcoming exchange of offers will allow us to successfully resume these talks towards an ambitious and comprehensive deal,” said the EU trade chief.

Agriculture in focus

The region-to-region trade pact, if successful, would lower barriers to goods and services trade, addressing also intellectual property issues, customs and trade facilitation, and other topics.

The European Commission places bilateral EU-Mercosur goods trade at €95.8 billion for 2014, with the EU bloc being Mercosur’s largest trading partner. Mercosur’s primary exports to the EU are agricultural products, while the EU mainly exports manufacturing products and commercial services and is the Southern Cone bloc’s biggest foreign investor. 

In a document released by the General Secretariat of the Council of the European Union on 7 April, agriculture was highlighted by the Austrian, Cyprus, Estonian, French, Greek, Hungarian, Irish, Latvian, Lithuanian, Luxembourg, Polish, Romanian, and Slovenian delegations as a sensitive area for the negotiations.

Recognising that Mercosur countries are “world leaders” and “highly competitive” in agricultural markets, the paper advised that a quota offer on “sensitive products” to Mercosur would be perceived as a “provocation” by the European agricultural sector and could have consequences in parallel trade negotiations, especially with the United States.

Some EU farm lobby groups, such as Copa & Cogeca, have argued strongly against the inclusion of sensitive products in the trade talks. According to a press release from the group, Cogeca chief Thomas Magnusson warned an 11 April meeting of several EU farm ministers against it, holding a separate meeting with the Netherlands – holders of the Council presidency – to stress that this could have a “catastrophic impact on the EU agriculture sector, especially beef.”

Speaking to AFP, Nin Novoa did not confirm whether these sensitive agricultural products would be on the table in the upcoming exchange of offers, however, responding instead that these talks are “complex” and that negotiation is needed due to varying interests at play.

Brazil political upheaval

The ongoing political upheaval in Brazil has raised questions over the potential future of the EU-Mercosur talks, given that the country’s lower house of Congress has voted to impeach President Dilma Rousseff, with the issue now set to go to the Senate.

Speaking to reporters last week, EU and Argentina officials both attempted to dispel such concerns. “We have been stalling with these negotiations for years. We now have a window of political commitment on both sides that, if we don’t use, will simply close,” said Federica Mogherini, EU High Representative for Foreign Affairs and Security policy, according to comments reported by Reuters.

Argentine Foreign Minister Susana Malcorra concurred that neighbouring Brazil’s goal is to reach a trade deal, arguing that the domestic political crisis should not hinder such efforts.

ICTSD reporting; “EU, Mercosur try again to get free trade deal,” EURACTIV, 11 April, 2016; “EU ministers rally to safeguard beef from Mercosur trade deal,” GLOBAL MEAT NEWS, 13 April, 2016; “Despite Brazil Crisis, EU to restart Mercosur trade talks in May,” REUTERS, 14 April, 2016.

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