EU – Mercosur conditions to the FTA

After the first exchange of offers on May, Mercosur and EU delegations are now in the phase of deepening their purposes and analyzing what has been offered.

Both sides, however, are now facing some restrictions and conditions by the counterpart in sectors relevant to their economies in order to achieve the perfect offer.

Among Mercosur´s conditions are that the European quotas for Mercosur’s exports cover not only the existing trade of agricultural goods, such as sugarcane and meet, but also trade of potential new products. In addition, Mercosur wants to add to the agreement a bilateral safeguard mechanism to mutual controversies, infant industry argument in order to allow punctual protectionist measures and a drawback duties regime.

European Union conditions regard the non-application of duties on the exports of soy by Mercosur, the establishment of new SPS measures and finally and, most important, require the agreement by the South-American partner on rules of origin, a measure than ensure products’ quality by registering its geographical indications and limiting the use of the nomenclature only to producers originally from that region.

The demands of the blocs are not new. Mercosur still more interested in ensuring a greater market for its commodity products, while protecting its “infant” industry, and the EU is interesting in ensuring a greater access to its D.O.C products and in avoiding a flooding of agricultural products in its market.

The goal to achieve an agreement is mutual. However, both parties will need to flexibilize their demands and focus in the mutual benefits of liberalization in order not to let negotiations dwindle again.

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