EU eyes Mercosur markets to fuel economic recovery

Sept. 14, 2010 at 12:15 PM
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RIO DE JANEIRO, Sept. 14 (UPI) -- Latin America's bid for more lucrative opportunities in Europe for commodities and raw materials has come a full circle. It's now the European Union seeking inroads into the continent's multibillion-dollar markets as its sluggish economy looks for new stimulants and sources of income.

EU Trade Commissioner Karel de Gucht will visit Brazil, lead member of Mercosur, this week to advance trade talks delayed over European farmers' protests. Mercosur approaches to Europe this year triggered fears that cheaper Latin American agricultural produce will price European farmers out of existence.

After his visit to Brazil de Gucht is to visit Argentina, which was criticized by Brussels for seeking to obstruct European exports to the country.

"Given Mercosur economic growth, I see important opportunities for EU exporters, investors and service providers in this region in the coming years," de Gucht said in a statement that announced the start of his tour.

He said "a balanced and ambitious" free trade agreement between the EU and Mercosur could bring substantial economic benefits to both sides and contribute to the economic recovery."

However, earlier attempts at talks to achieve that balance were marred by European unease over competitive Latin American commodities and farm produce.

Mercosur and European negotiators have been locked in negotiations since 1995 to hammer out a free trade deal, yet each time they have been frustrated by domestic European political considerations and strong lobbying by farmers' representatives.

After several false starts the talks were suspended in 2004 and contacts didn't resume until last year. The first round of talks in May remained inconclusive and further talks in June were marked by muted recrimination over the terms on offer from both sides.

Despite forceful pleas from Brussels and Spanish support, more than a dozen EU farm ministers mindful of domestic politics remain skeptical about having a free trade deal with Latin America.

Opponents cited what they saw as Latin American shortcomings in food safety, environmental protection and animal welfare.

Supporters for a deal pointed to Mercosur's combined gross domestic product of more than $1 trillion and its vast market of more than 250 million people with growing purchasing power.

Mercosur full members Argentina, Brazil, Paraguay and Uruguay are soon to be joined by oil-rich Venezuela, whose membership is awaiting ratification. In addition, associate members Bolivia, Chile, Colombia, Ecuador and Peru offer the EU lucrative markets that are largely unexplored by European exporters.

Mercosur has made clear its aim to create a continent-wide free-trade area similar to the EU.

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