Business
Trade Agreements. On Febraury 20th, a new round of negotiations started between the representatives of the Common Market of the South (Mercosur) and the European Union (EU) in Asunción, Paraguay. The previous round, took place in Brussels on January, was able to conciliate positions in the issue of Latin American bovine meat: a new exportation quota of 99.000 tons was set. In return the EU demands the opening of the Latin American milk industry to European production. This, together with the issue of designations of origin, are being the key issues of the negotiations. Intellectual rights and origin rules will also be discussed. The results of the round will be known on March 2nd. If there is no agreement, then there will be another round of negotiations in Brussels at the end of March.
The history of the free market agreement between the Mercosur and the EU started in the year 1999. But, since 2016, with the new geopolitical context, it has been gaining momentum. Since then it has been moving forward strongly and an agreement sounds imminent. Looking forward to this objective, a new round of negotiations will take place from February 20th to March 2nd in Asuncion.
The round that took place in Brussels in January was not able to seal the agreement due to disagreements in four key points. Those will be the centre of the debate in this new round. The first one is the goods trade. This discussion is about the amount of goods that one region can sell to the other. It also establishes the access conditions of those goods.
In the bovine meat area, one of the most difficult points in the history of the negotiations, the Mercosur got an enhanced offer: 99.000 tons against the 70.000 tons offered in December, 2017. In return the EU demands the opening of the Latin American milk industry to their products. The area is especially sensitive to Uruguay and Argentina so an agreement seems unlikely. The Paraguayan chancellor Eladio Loizaga said: “the meat issue is resolved”. But, at the same time, the Uruguayan chancellor, Rodolfo Nin Novoa stated: “there is no meat quota that can pay for the milk industry issue because that area is extremely sensitive to our country”.
The second problematic issue is the one about the designations of origin that every regional bloc defends. The EU seeks to benefit his products by establishing a tough protection to his characteristics products that are associated to a specific geography. As an example, only the French cheese will be allowed to use the name Roquefort. The Mercosur is against these rules and argues that this will affect negatively his cheese and wine industry.
Another issue will be the one about origin normative. This is used to set the amount of regional components that a good must have to be a part of the free market zone. The Mercosur demands that every product should have a high amount of European components, so they can avoid the secret entry of cheap products of other regions such as Asia using the EU as a mean. In the other hand, the EU defends the incorporation of manufactured goods with components from outside the regional bloc.
Finally, there will be a debate about intellectual property. The EU is trying to impose a set of rules that will stimulate the creation of patents and the defense of commercial secrets. But the Mercosur thinks that that stimulates the creation of productive monopolies in hands of big corporations.
Next Steps
The negotiations seem to be complex but nobody rules out the possibility of an agreement. If it is necessary there will be a new round of negotiations by the end of March in Brussels. Past that date the treaty could stagnate. The problem will be that, by then, the presidential campaigns in Brazil and Paraguay will start, and that could bring new politicians with views against the agreement. About that, the Communication Secretary from the Mercosur Parliament, Rafael Reis said: “The negotiation will continue till March. If there is no agreement, it is likely that the treaty will not be signed in 2018”.