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 EU-Mercosur
Late 1995, the European Union initiated negotiations on a bilateral free trade agreement with Mercosur (common market between Argentina, Brazil, Paraguay and Uruguay) as a reaction to the US’ push for a Free Trade Area of the Americas (FTAA). The FTAA is sometimes seen as an expansion of NAFTA — it would create a trade zone englobing all countries of North and South America except for Cuba. The members of the FTAA would practice internal tariff rates and investment privileges and so on that companies from outside the region will not enjoy. FTAA would form a special club of investors and governments enjoying preferential access to each others’ economies. That is why the EU wants its own special relationship with Mercosur, since Mercosur represents the largest market segment of Latin America within the FTAA. (To put things in perspective, Brazil’s top trade negotiator, Celso Morin, has bluntly described the FTAA as a bilateral agreement between Mercosur and the US.)

The EU-Mercosur FTA — which could be termed an inter-regional agreement, or more accurately a bilateral agreement between two common markets — was slated to be completed in October 2004. But the two sides failed to agree on each other’s final offers. Among other things, Mercosur was not satisfied with the EU’s agricultural market access provisions while the EU complained of the lack of Mercosur proposals to open their telecommunications sector and to upgrade protection of European geographical indications. More generally, commentators blamed the failure of the talks on mutual lack of political will.

Discussions resumed in 2005 and the EU planned to reach an agreement by 2006; however, the resumption of negotiations has been put off indefinitely due to the resistance of South American countries to opening up certain markets and to the European rejection of demands to cut agricultural subsidies.

last update: April 2009


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