Mercosur-EU trade talks marred by fear of the unknown

Nov. 18, 2010 at 8:35 AM   |   0 comments

BRASILIA, Brazil, Nov. 18 (UPI) -- Trade talks aimed at securing a free trade deal between the European Union and Latin America's Mercosur economic bloc are set to enter a new round but fear of what awaits the potential partners is keeping brakes on the negotiations.

Latin America's emergent economies are fearful of Europe's superior marketing and sales pitch for its goods and services but European fears of cheaper agricultural imports from South America are far from dispelled.

Both sides are resigned to the idea the partnership carries huge risks but neither side wants to be the first to offer concessions, published comments from the negotiators showed.

The next round of Mercosur-EU talks, scheduled for later in November or early December in Brasilia, Brazil, will likely draw new comments from both sides on draft proposals on procedures for market access.

Optimists among those involved say negotiations should be over by the summer of 2011. Skeptics have warned of tougher bargaining over the scale and scope of access each side wants or is prepared to offer, analysts said.

The challenge is how to reach a balance between offers that are neither too little nor too much in terms of concessions to be made available to the trade partners.

The South American bloc -- Mercosur full members Argentina, Brazil, Paraguay and Uruguay -- fears EU's industrial exports and services could decimate the continent's emerging manufacturing sector.

The European side, especially the lobbyists and representatives for the agribusiness sectors, are apprehensive about the effect of Mercosur's cost-effective agricultural production practices and competitive prices.

In talks so far, negotiators found common ground -- but no specific agreements -- on the feasibility of eliminating tariffs, liberalizing investment and services and removing non-tariff barriers.

The strongest opposition to Mercosur still is entrenched in countries, notably France and Ireland, where politicians are fearful of losing their standing among voters in their burgeoning agriculture industries.

Mercosur and Europe first went into talks on a free trade agreement in 1999 but soon lost interest in pursuing the idea, mainly because of European fears. The talks resumed in May this year as Europe sought new trader partners as part of its bid for faster economic recovery after the 2008-09 economic downturn.

Following the resumption in Madrid on the sidelines of a summit meeting, Mercosur and European negotiators met in Buenos Aires in June and Brussels in October.

European economic strategists have their sights set on Latin America's more lucrative markets, Argentina and Brazil and eventually Venezuela. Most of Latin American economies, with the notable exception of Venezuela, emerged stronger from the economic downturn.

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