MERCOSUR-EU Agreement: negotiations in Paraguay ended without progress
16 marzo 2018


Trade agreements. On March 2nd, a new round of negotiations between the Common Market of the South (MERCOSUR) and the European Union (EU) was completed in Asunción. They did not achieve concrete progress in any of the problematic areas. The understanding achieved in the meat trade was diluted by the European demand for access to Latin American dairy markets. From the Latin American block it was proposed to allow the entry of certain dairy products not produced in the continent and any negotiation on processed milk was ruled out. From the European Union considered the proposal insufficient. Rules of origin and intellectual property also had no overcoming proposals. In spite of the representatives optimistic statements about the future of the treaty, no new round was scheduled in the short term.

The agreement between MERCOSUR and the EU remains locked after the end of, the round of negotiations held in Asunción, Paraguay March 2nd. Once again there are three chapters that separate the parts. The first is the trade of goods. MERCOSUR has refused to open its dairy industry, a condition imposed by the EU to allow the entry of a larger share of meat. In this sense, the Latin American bloc proposed allowing the entry of certain products not produced in the continent (certain types of cheeses) but flatly refused to open the processed milk market. Without this concession, the European proposal for a quota of meat of 99,000 tons, a requirement of MERCOSUR in previous rounds, could fall.

In second place, problems persisted regarding the rules of origin. The EU continues to request the acceptance of Denominations of Origin (DO) and Geographical Indications (GI). These parameters would ensure that certain Latin American products can not use certain names which would be exclusively for European products. At the same time, the European bloc intends to impose the “safeguard clause” that allows the signatory countries to individually apply suspensions to imports of certain products when it is proven that, due to price and income values, they are causing irreversible damage to local products. MERCOSUR is opposed to all this.

Finally, we find the subject of intellectual property. From the EU are looking for regulations that regulate and defend more strongly the patents and trade secrets of the companies that are incorporated into the agreement. But Mercosur considers that this stimulates the creation of productive monopolies in the hands of large corporations.

Next steps:

Despite the post-negotiation optimism shown by the foreign ministers, the future of the agreement is uncertain. No date was set for a new round of negotiations. They declared that the talks will be continued by digital means and that the signing could take place in the coming weeks.

If an agreement is not reached on these digital communications, the outlook of the agreement will be blackened. The elections in Paraguay and Brazil will be a new factor of uncertainty. Firstly,  due to that the outgoing ruling parties may not want to approve a treaty of such magnitude because of the political cost. Secondly, because the new ruling parties may not consider it a priority in their efforts.