Brussels: Mercosur-EU Talks on Trade Deal to Continue

Trade talks between Mercosur and the European Union have closed in Brussels without an agreement. The discussions were held behind closed doors and ended without a press conference making it difficult for observers to assess what has been resolved and if any stumbling blocks remain.

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A new round of negotiations on the deal will begin on Feb. 19 in Paraguay´s capital Asuncion. Uruguay’s Foreign Affairs Minister Rodolfo Nin Novoa, said last week that he thinks they will be able to close a deal: “I have high expectations because there are three pillars: the political, the cooperation and the economic. The first two are almost closed, and some adjustments are necessary to close the third.”

Several reports claim the European Union agreed last week to increase beef quota from Mercosur countries (Argentina, Brazil, Paraguay, and Uruguay) from 77,000 to 99,000 tons. It is not clear if this amount will be allowed to enter without tariffs or low tariffs.

According to Argentine diplomat, Felipe Frydman, 99,000 tons represents only 1.3 percent of the European market. Last year Mercosur had demanded 390,000 tons or five percent of the EU market.

The quota comes with the expectation that Mercosur countries will ease access for European dairy products and the auto industry, as well as allowing European companies to bid for public contracts.    

Beef producers in Europe opposed the previously offered import quota of 77,000 tons claiming it would hurt the national industries of France, Ireland, and Poland. It is not clear if this issue was overcome in the meeting or if it will be discussed later this month.   

Currently, no Mercosur beef enters the EU tariff-free. The EU imports approximately 46,800 tons of beef from Mercosur countries, an amount established by the EU’s Hilton quota for high-quality beef which places a 20 percent tariff.

Other long-standing issues with the trade agreement include the quota for Mercosur’s ethanol and sugar, the time allotted for eliminating tariffs (the EU has lobbied for ten years while Mercosur wants 15 years), and intellectual property, which affects medicine and agro-chemicals.

Aside from formal negotiators, workers and social movements in Mercosur are concerned that opening the market to European industrial goods can hurt national industries and employment. Environmentalists also fear that tariff-free quotas for beef will bring a greater expansion of the cattle industry, and with it greater deforestation and pollution.