| EU-MERCOSUR NEGOTIATIONS TAKE-OFF:
Multiple lanes of a process with different possible final scenarios
by Félix Peña
English translation: Isabel Romero Carranza
After resuming the negotiations between Mercosur and
the EU, three recent events deserve our attention. One of them is the
meeting of the Bi-regional Negotiations Committee (BNC) in Buenos Aires.
The second is the IV Brazil-EU Summit that was held in Brasilia, together
with a bilateral Business Forum. The third is the debate in the European
Parliament on the issue of agriculture and the bi-regional negotiations.
The three events illustrate the different lanes along
which bi-regional negotiations are being developed. These have their own
dynamics and help externalize the difficulties that will need to be confronted
in order to conclude a bi-regional agreement.
It is still too early to predict which of the possible
final scenarios will prevail in the future. These possible scenarios are:
the successful conclusion of a bi-regional agreement; a lengthy negotiation
with no concrete results; and a failure that eventually opens the door
to bilateral agreements, such as those concluded between the EU and the
Andean countries. This last scenario wouldn't be so much the result of
a failure that originates in the European agricultural sector but one
which could be attributed to a Mercosur member country.
The mere fact that the hypothesis of a bilateral agreement
between a country and the EU is being considered doesn't strengthen the
negotiating position of Mercosur before its European counterpart. In particular
when the negotiations have just been re-launched and nothing would indicate
that any country wants to prevent a successful outcome on this regard.
Something similar happened at the beginning of the decade when the idea
of bilateral trade negotiations between Mercosur countries and the US
was proposed. The reaction at the time was quite negative, particularly
on the side of Brazil.
Since such hypothesis is not the result of an open
and honest debate between the partners it could be reflecting fundamental
misgivings about the strategic alliance that upholds Mercosur. It would
thus transcend the methodological aspect of how to approach trade negotiations
with third countries or blocks of countries and would imply some sort
of questioning at the core of Mercosur's existence.
After resuming the negotiations between Mercosur and the EU, three recent
events deserve our attention. One of such events was the celebration of
the first negotiating meeting of this new stage. The second relevant event
was the latest Brazil-EU Summit held in Brasilia. The third event was
the debate in the European parliament on the implications for European
agriculture of an eventual bi-regional agreement.
The first negotiating meeting of the new stage, initiated in Madrid (see
the May 2010 edition of this Newsletter), took place in Buenos Aires
between June 29 and July 2. Formally it was the XVII Meeting of the Bi-regional
Negotiations Committee -BNC- (for the final conclusions and annexes see
here -in English- and http://www.attacargentina.com.ar/
aquí -in Spanish-). The formal talks were resumed through the
meetings of eleven working groups. One of the main tasks of these groups
was to pinpoint and update the issues that had been interrupted in October
2004. The tasks to be worked on towards the next BNC meeting, which will
take place at the end of September in Brussels, were defined. The European
negotiator, Joâo Aguiar Machado, "stressed that there is still
substantial work ahead on a number of important issues to both sides in
order for an ambitious and balanced agreement to be reached, while avoiding
measures that restrict trade to secure an environment conducive to successful
These negotiations will entail a remarkable coordination effort both
among Mercosur member countries and among EU member countries, including
the Commission and its various internal areas. An efficient articulation
within each one of the countries on both sides will be required as well.
One example, among others, is the diversity of interests on the European
side in relation to agriculture, the automotive industry and capital goods
and services (regarding the different positions that can be found in Brazil
see the article by Sergio Leo in Valor Econômico of July 12, 2010,
entitled "Acordo comercial tem embaraço no Brasil").
The second remarkable event was the IV Brazil-EU Summit held in Brasilia
on July 14 (see the text of the Joint Declaration on http://www.itamaraty.gov.br/)
with the participation of the President of Brazil and the Presidents of
the European Council and the European Commission. Paragraph 16 of the
resulting declaration refers to the importance of the re-launch of the
bi-regional negotiations: "Brazil and the EU recalled the importance
of the negotiations for a MERCOSUR-EU Association Agreement which were
re-launched at the IV MERCOSUR-EU Summit, held in Madrid, on May 17th
2010. They noted the outcome of the first round of discussions held in
Buenos Aires between 29 June and 2 July. They stressed that the timely
conclusion of an ambitious and balanced agreement that takes into account
the specific interests of both sides would enhance the relations between
the two regions and bring substantial political and economic benefits
to them." (On the Summit see the article by Sergio Leo "Agenda
fraca e sem temas polêmicos marca cúpula Brasil-Uniâo
Europeia", in Valor Econômico, July 13, 2010). President Lula
da Silva pledge to give priority to the bi-regional negotiations during
the period of the Brazilian pro-tempore presidency of Mercosur in the
second semester of 2010 (on this regard see the article by Yara Aquino
"Lula quer prioridade para acordo entre Brasil e Uniâo Europeia",
in Valor Econômico, July 15, 2010). From the text of the Joint Declaration
it becomes clear, yet again, that there is a close link between the issues
related to "bilateral affairs" included in item III and those
that were to be developed between Mercosur and the EU as per the Framework
Agreement of Cooperation signed in 1995, still in force. The IV Bilateral
Business Forum took place at the same time of the Summit (on this issue
see the article by Samantha Maia in Valor Econômico, July 15, 2010).
The third noteworthy event is the debate that took place in the European
Parliament during its July 8 session, in particular regarding the chapter
of agriculture of the bi-regional negotiation. The EC Commissioner for
Trade, Karel De Gucht, participated in this debate. On this issue, it
should be noted that the role of the European Parliament in the matter
of international trade negotiations has consolidated with the enactment
of the Treaty of Lisbon.
The questions posed by twenty-nine representatives of diverse nationalities
and political groups revealed the main concerns of several member countries
regarding the implications for European agriculture of the re-launched
bi-regional negotiations. The full text reads as follows: "The College
of Commissioners agreed at its meeting of May 4, 2010 to reopen negotiations
for an Association Agreement between the EU and the Mercosur countries.
Should an agreement result from these negotiations, it may present EU
agricultural producers with considerable challenges, notably in the beef,
poultry meat, wheat and fruit and vegetable sectors. There may also be
indirect adverse consequences for other sectors including the pig meat
sector. - What is the precise mandate which has been given to the negotiators
with regard to the agricultural aspects of the negotiations? - Can the
Commission provide Parliament with a detailed analysis of the likely impact
on European producers if a deal is agreed on the basis of that mandate?
- Which measures, if any, does the Commission intend to take to provide
adequate compensation for EU producers whose economic interests are adversely
affected by an Association Agreement with the Mercosur bloc? - How will
it ensure that the standards, in terms of food safety, labor conditions,
environmental protection and animal welfare, for the products imported
from the Mercosur countries are equivalent to those demanded of EU producers?
- What is the relationship between such an agreement and the ongoing negotiations
for a multilateral agreement at WTO level?" (See http://www.europarl.europa.eu).
In his intervention, Commissioner De Gucht answers these questions at
length (for the full text of the parliamentary debate and the answers
by Mr. De Gucht go to http://www.europarl.europa.eu/).
It is advisable to read the full text.
The three previously mentioned events illustrate the different lanes
along which bi-lateral negotiations are being developed. These have their
own particular dynamics and help externalize the difficulties that will
need to be confronted in order to successfully conclude an agreement of
At the Buenos Aires meeting, for example, it was striking how the emphasis
was placed in trade measures considered restrictive of bi-regional trade,
especially by the Europeans - in one case this could eventually have an
impact on trade flows of about two million dollars - with the possibility
of interrupting the negotiations or of not holding a new BNC meeting in
the future. The main European negotiator made some declarations on this
regard. Some analysts have even perceived this as a preview of the "blame
game" that could take place if negotiations were to fail because
of one country and thus open the path for bilateral agreements, such as
the case with the Andean Community of Nations.
At the same time, on occasion of the Brasilia Business Forum, a relevant
industrial leader - Robson Andrada, President of the Confederation of
National Industry (CNI) - allegedly criticized its government for not
assigning priority to the bilateral agreements. According to what was
leaked out to the press, he would have pointed out that "maybe the
government believes that this should be done through Mercosur. I believe
that it would be easier for our country to negotiate on its own, due to
the existing differences between Brazil and Argentina, for example"
(our own translation; see the abovementioned article by Samantha Maia,
in Valor Econômico, July 15, 2010). This is an opinion that was
also expressed by one of the candidates to the Brazilian Presidency, José
Serra. Indeed, Mr. Serra remarked that "it would be of great importance
to make Mercosur rules more flexible with regards to third parties so
that we can move at different speeds. Brazil has more possibilities of
advancing in the negotiations on its own than with the other Mercosur
partners" (our own translation; version from ANSA, of July 16, 2010
According to Serra this would require the modification of a Decision of
the Mercosur Council (in reference to decision nº 32 from the year
2000). He also added that "in 2004, the agreements were working just
fine, but Argentina resisted the idea of opening up its market to food
products from the EU
" (See the Reuters-based article entitled
"Tucano defende regras mais flexíveis para Mercosul",
in Valor Econômico, July 16, 2010; see also the article by Juan
Arias "Serra bets on an agreement with the EU that does not depend
on Mercosur. The presidential candidate of the opposition believes that
Brazil must move forward on its own", in El País, Madrid,
17 July, 2010). The Reuters article argues that the President of the European
Commission, Mr. Durâo Barroso, mentioned Argentina as an eventual
obstacle in the negotiations between Mercosur and the EU. Thus we can
see a certain tendency to establish the idea that Argentina has been,
and could become again, the obstacle for a bi-regional negotiation. However,
it would seem that the references to the events of 2004 would require
a more precise and well-founded analysis of the actual reasons for the
failure. In relation to the recently resumed negotiations, nothing of
what took place at the recent BNC would seem to justify the fact that
Argentina should be mentioned as a possible source of insurmountable obstacles.
At the same time, the debate in the European Parliament demonstrated
once more that the agricultural issue will pose severe difficulties during
negotiations, at least on the side of some European countries.
It is still too early to predict which of the possible final scenarios
will prevail in the future. These possible scenarios are: the successful
conclusion of a bi-regional agreement; a lengthy negotiation with no concrete
results; and a failure that eventually opens the door to bilateral agreements,
such as those concluded between the EU and the Andean countries (Colombia
and Peru). This last scenario wouldn't be so much the result of a failure
originating within the European agricultural sector as of a failure that
could be attributed to one of the Mercosur member countries.
This is the reason why the fact that some relevant personalities from
Mercosur member countries should conjure up the hypothesis of an eventual
bilateral agreement of one of the countries with the EU doesn't contribute
to strengthen the negotiating position of Mercosur before its European
counterpart. Particularly so, when the negotiations have just been re-launched
and nothing would indicate that any country has the intention of preventing
a successful outcome on this regard. Something similar happened at the
beginning of the decade when the possibility of a bilateral trade negotiation
between Mercosur member countries and the US was raised. The initiatives
of some Mercosur partners for bilateral negotiations with the US caused
at that time a negative reaction from Brazil.
Not being the result of a straightforward and open debate between the
partners, the bilateral hypothesis based on the Andean-EU model and the
necessary flexibilization of its current rules could expose fundamental
misgivings about the strategic alliance that upholds Mercosur. In other
words, this would go beyond the mere methodological plane of how to approach
trade negotiations with third countries or blocks of countries. It would
imply some sort of questioning at the core of Mercosur's existence.
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Félix Peña Director
of the Institute of International Trade at the ICBC Foundation. Director
of the Masters Degree in International Trade Relations at Tres de Febrero
National University (UNTREF). Member of the Executive Committee of the
Argentine Council for International Relations (CARI). Member of the Evian
Group Brains Trust. More