[Ip-health] Bridges Weekly: EU, Mercosur Negotiators Aim for "Endgame" in Trade Talks

Thiru Balasubramaniam thiru at keionline.org
Thu Dec 7 03:48:06 PST 2017




EU, Mercosur Negotiators Aim for "Endgame" in Trade Talks

7 December 2017

Negotiators from the European Union and the South American bloc Mercosur
are ramping up their efforts to finalise a trade accord between them, with
the hopes of announcing a political deal on the margins of the WTO’s
Eleventh Ministerial Conference (MC11) in Buenos Aires, Argentina, next

The two coalitions have been negotiating an Association Agreement and
related trade deal since 1999, though those talks later stalled over
disagreements on sensitive topics such as agriculture. They rebooted
negotiations in 2010, and later renewed their discussions last year. (See
Bridges Weekly, 21 April 2016)

The latest round was completed on 10 November in Brasilia, Brazil, with
another round currently underway through 8 December in Brussels, Belgium.

“We hope that we can exchange offers on most of the issues. Of course, we
know that there are some sensitivities remaining, so we will have to see
how far we get this week,” said EU Trade Commissioner Cecilia Malmström in
Brussels this week, speaking during “EU Trade Policy Day” on 5 December.

Previewing the EU-Mercosur discussions in Buenos Aires at the WTO
ministerial, she noted that ministers plan to “take stock [of] where we are
and if we can see the skeleton of an agreement, if we can see the most
sensitive issues – can we move into the very final endgame and then make an
announcement of where we are.”

She also noted that the timeframe is important, given potential shifts in
political dynamics, and stressing that the two sides would like to see a
deal done by late this year or early next. Brazil is set to see general
elections in October 2018, for example.

“We are committed to do this as soon as possible because we are almost
there, because there is a momentum, because next year, if it drags on too
long there will be election campaigns and you risk losing that momentum,”
she added.

According to a report on the November round issued by the European
Commission, the two sides made significant progress in various areas,
including on the chapters involving government procurement, sanitary and
phytosanitary (SPS) measures, and dispute settlement. It also noted
“divergences” in various areas, which negotiators are working to whittle
down in the days to come.

The planned deal would also cover areas such as rules of origin,
sustainable development, services and establishment, intellectual property
including geographical indications, technical barriers to trade, and an
anti-fraud clause, among other topics.

However, market access, particularly on beef, ethanol, and car parts,
remains among the most challenging issues to resolve, Malmström noted this
week. Agriculture is a major sector for both sides, and disagreements in
this area have repeatedly stymied progress in the talks in the past.

For example, some EU member states have balked at the prospect of slashing
tariffs on imported beef from the Southern cone countries, which is a key
ask from the latter group. Agricultural products already make up a hefty
portion of Mercosur exports to Europe, along with minerals and machinery,
according to European Commission statistics.

Mercosur is reportedly willing to phase out import tariffs at a faster pace
in exchange for greater market access on beef, according to comments from
an Argentine negotiator reported in Reuters. Automobiles also remains a
challenging area, given that both sides are home to major producers of cars
and car parts. Approximately 17 percent of the EU’s exports to Mercosur
countries involve vehicles and their components.

Even if a political deal is announced in Buenos Aires at the WTO
ministerial, there will still be other steps to finalise before an
agreement can take effect – such as wrapping up any final technical or
sensitive issues, translation and legal “scrubbing” of the text, signature,
and ratification.

Trading relationships

Officials from both sides have said that deeper trading relationships with
partners that share similar values could be a boon not only to economic
growth, but also for meeting sustainable development objectives,
particularly in the current geopolitical landscape where trade policy and
politics have increasingly taken the spotlight.

Analysts say that the push for finalising the long-running trade talks
could have a significant economic impact for both sides directly. For
example, Matias Spektor, a professor of international relations at Brazil’s
FGV business school, told the Bloomberg news agency that the deal could be
“a game changer for economic recovery in Brazil and Argentina,” which are
the two largest economies in the four-country coalition and have been
hard-hit by an economic downturn in recent years.

The 28-nation EU is already Mercosur’s largest trading partner, making up
one-fifth of the latter bloc’s overall trade, according to statistics
published by the European Commission.

The Mercosur coalition has also been expressing growing interest in
developing deeper trade ties with both regional partners, as well as those
further afield.

The group has been looking at how to build a closer relationship with the
Pacific Alliance, a newer coalition of Latin American countries that
currently includes Chile, Colombia, Peru, and Mexico as full members, with
other countries in the process of negotiating associate membership. (See
Bridges Weekly, 2 November 2017 and 13 April 2017)

The EU and Chile have recently launched talks to modernise their existing
trade accord, while Brussels is also in the penultimate stages of
negotiating an update with Mexico City to their existing agreement. (See
Bridges Weekly, 23 November 2017)

The EU has a series of other trade negotiations underway that could see
significant developments in 2018,such as the expected launch of trade talks
with Australia and New Zealand, respectively. The 28-nation bloc is also
aiming to finalise the final sticking points in its trade agreement with
Japan, having announced a political deal earlier this year. (For more on
EU-Mexico, see related story, this edition)

ICTSD reporting; “New round of EU/Mercosur talks in Brussels: agriculture
main concern for France, Ireland, and Poland,” MERCOPRESS, 27 November
2017; “Mercosur to offer EU faster reduction in tariffs: Argentine
negotiator,” REUTERS, 24 November 2017; “Progress on EU-Mercosur Deal
Sparks Hopes of a ‘Game Changer’,” BLOOMBERG, 4 December 2017; “Mercosur
sees more than 70 percent chance of EU trade deal: official,” REUTERS, 6
November 2017.

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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