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EU, Mercosur fail to reach agreement

Agence France Presse | 20 October 2004

EU-Mercosur free trade talks extended into 2005

LISBON : Slow-moving talks between the European Union and the four-nation South American Mercosur trade bloc, aimed at building the world’s largest free-trade area, will be extended beyond the October 31 deadline into next year, negotiators at talks here announced.

Recognising that "progress" had been made, the delegates from both sides "have agreed that there is still much to do before reaching the required level which the strategic importance of this accord between the EU and Mercosur reflects," the meeting’s final communique stated.

"To that end, the ministers are convinced of the necessity of pursuing the negotiations," the statement continued.

A meeting of the talks’ coordinators will be held before the end of the year, to be followed by a ministerial meeting in early 2005.

European commissioners for farming and trade, Franz Fischler and Pascal Lamy, met here with the foreign ministers of Argentina, Brazil, Paraguay and Uruguay to discuss the latest proposals for the accord.

An agreement would create the world’s biggest free-trade area affecting a population of more than 650 million and would boost Mercosur’s bargaining position with the United States in negotiations to create a Free Trade Area of the Americas which are scheduled to begin in January.

The EU-Mercosur negotiations, which have dragged on for five years, have stalled over agricultural trade barriers and the opening up of government procurement.

At the end of September the European Union tabled a proposal offering to cut its customs tariffs on 65 percent of industrial goods imported from Mercosur countries as soon as a deal is signed while retaining some quotas on sensitive farm products.

Mercosur wants better access to European markets for its agricultural goods, especially beef, with an increase in the quotas that the EU has proposed.

The EU meanwhile wants to hear a better proposal from Mercosur in the investment sector, government acquisitions, telecommunications, marine shipping and banking.

"The question today is very simple: do we stop the train or do we carry on?" Lamy told a press conference, adding that everyone involved preferred the second option.

Mercosur also includes Bolivia and Chile as associate members.

Lamy and Fischler both retire at the end of the month when their mandates end and if no deal is reached by then Mercosur will have to negotiate with the new incoming European Commission.

Portugal was chosen as a host for the talks because of its historical ties with South American nations, notably with former colony Brazil.

 source: AFP