Mercosur failure looms over Rio summit

Date: 03/06/1999

By Gareth Harding

THE failure of EU governments to agree a negotiating position for free-trade talks with the Mercosur group of countries has cast a shadow over the first-ever summit of European and Latin American leaders later this month.

The two trade blocs were hoping to kick off formal negotiations on a trade deal at the 28-29 June summit in Rio de Janeiro, but this looks increasingly unlikely after Union foreign ministers argued over the timetable for the proposed talks earlier this week.

In an attempt to break the deadlock which had scuppered previous attempts to settle the issue, the German presidency tabled a compromise which would have cleared the way for non-tariff talks to begin immediately but delayed any discussion of product quotas and import duties until the end of next year.

Most countries agreed with the proposal, but France and Ireland insisted that negotiations on tariffs should wait until the results of the next round of World Trade Organisation talks end in 2003.

France is particularly worried that member states will be flooded by farm produce from the agriculture-rich countries of the southern cone. But Mercosur, which groups together South America's two largest economies - Brazil and Argentina - with Uruguay and Paraguay, have made the opening up of Europe's heavily subsidised farm markets a precondition for any trade deal.

On a visit to Portugal in late April, Brazilian President Fernando Henrique Cardoso warned that if Europe failed to open its doors to agricultural products, Brazil would be pushed into the arms of the North American Trade Association. Latin America leaders meeting in Mexico City last weekend also reiterated their call for the Union to agree to greater market opening at this month's summit.

A spokesman for External Relations Commissioner Manuel Marin said France's take-it-or-leave-it approach was "disappointing".

" We cannot go to Rio empty-handed. It would be a big diplomatic failure," he said.

Diplomats will try to thrash out a common line ahead of the next meeting of Union foreign ministers on 21-22 June. But without a U-turn from Paris, officials predict that the EU will turn up in Rio with nothing but a vague commitment to start free trade talks as soon as possible.

Keyword: Latin America.