Agreement Mercosur-European Union: not yet

 

Mercosul + EU

   Pedro da Motta Veiga (CINDES)

   Sandra Polónia Rios (CINDES)

  In Dilma Rousseff’s Brazil, the trade policy has been almost exclusively shaped by defensive concerns and the negotiated policy dimension has remained in “hibernation mode” in recent years. In this scenario, it is surprising that the negotiations between Mercosur and the European Union are still continuing, even though it is important to recognize that in this case the difficulties to advance cannot be attributed entirely to Brazil nor to Mercosur. Actually, the negotiations for a free trade agreement between Mercosur and the EU have been the main subject being discussed within the decision-making bodies of the South American bloc since last year.

The negotiations resumed in 2010, but it was only during the Mercosur-EU ministerial meeting in January 2013 that the two blocs pledged to exchange offers for market access in goods, services, government procurement and investments no later than in the last quarter of 2013. This deadline has not been met. Mercosur’s main difficulty is to prepare a single offer of liberalisation including the four members that are part of the negotiations (Venezuela remains aside of this negotiation). Merging the offer lists individually prepared by each member reduces the total coverage of the offer, since there are many differences between the lists of each country.

The efforts of coordination intra-bloc have proceeded throughout 2014, mostly to seek an improvement in the Argentinian offer, which has been the main responsible for the decrease in the coverage of the consolidated offer. In 21 March 2014, negotiating parties met in Brussels and concluded that the level of their offers was still insufficient to advance to the final phase of the negotiations. There is an increasing scepticism regarding the probability of reaching an agreement sometime this year.

The European side needs to overcome some obstacles, such as uncertainties about the ability of the European Commission to draw up a proposal for agricultural liberalisation that is attractive for Mercosur; the change of command in the European Commission and in the negotiating team; the results of the European Parliament elections – which can be interpreted as a strong criticism to the European institutions and reduce the legitimacy of the Commission to negotiate sensitive issues such as agriculture –; and the focus on the negotiations between the United States and Europe for the Transatlantic Trade and Investment Partnership (TTIP).

On the Mercosur side, the recurring difficulties in the industrial sectors and the complex economic situation of Argentina limit the room of manoeuvre that the governments are required to go beyond the initial deals settled among the bloc’s members. Moreover, it is usually difficult in any country to adopt comprehensive trade agreements amid presidential election periods. With Brazil holding elections in October 2014 – and the expectation of a fierce race –, it is unlikely that the deal can be concluded by the end of this year.