Union split over scope of Mercosur trade talks

Date: 06/05/1999

By Gareth Harding

THE European Commission is hoping to kick off free trade talks with the Mercosur group of countries after next month's summit of EU and Latin American leaders.

But negotiations risk being held up by squabbling between member states over how far and how fast the blocs' respective markets can be opened up.

EU foreign ministers will attempt to settle their differences later this month but, if past attempts are anything to go by, they will have their work cut out. The last time they met, ministers rejected a German proposal which would have taken the result of the upcoming World Trade Organisation negotiations into account whilst committing the Union to wrap up talks by 2003.

Some EU member states fear being flooded by meat, fruit and wine from the agriculture-rich countries of the southern cone, whilst others believe any talk of tariff cuts is impossible until after the next round of WTO talks which begins this autumn.

However, a head of steam appears to be building behind a British and French proposal to start negotiations on the non-tariff aspects of a trade deal immediately and wait until after the WTO talks to see if any further opening up of the blocs' markets is needed.

Mercosur, which groups together South America's two largest economies - Brazil and Argentina - with Uruguay and Paraguay, is one of the world's largest trade blocs, with a combined gross domestic product of about €1 trillion.

The EU is under pressure to strike a deal after Mercosur members joined talks last year aimed at setting up a Free Trade Agreement of the Americas which would establish a single market from Alaska to Patagonia.

The Union is the largest outside investor in the Mercosur region.