MERCOSUR expects to exchange tariff-reduction proposals with EU next June

Montevideo, April 1- MERCOSUR expects to present a joint proposal regarding tariff reductions to the European Union during a meeting next June, according to Brazil's Minister of Development, Trade and Industry, Mauro Borges who apparently convinced a reluctant Argentina to join the group.

The EU and MERCOSUR have been trying to reach an ambitious trade and cooperation agreement since 1999, an initiative that was re-launched in 2010 after several years of stand-still. For different political tempos and trade reasons, the two sides have been delaying the understanding, but basically reciprocal objections to EU farm subsidies and MERCOSUR industry policies.

Now however with a declining economy, the elimination of certain EU market access benefits and the need to further diversify foreign trade, Brazil supported by Paraguay and Uruguay have been pressing strongly to reach an agreement, while Argentina with a policy to promote the domestic market and manufacturing, has been more reluctant.

But last week Argentina and Brazil completed a round of low key trade talks which seemed to have opened the way for a major understanding with Europe. The two countries agreed to a mechanism to promote bilateral trade by providing the lubricant, scarce dollars and credit, and a memorandum of understanding was reached in the framework of the Inter-American Development bank which took place in the northeast of Brazil.

This first 'bilateral' step apparently according to Brazilian sources led to a more flexible position from Argentina regarding the MERCOSUR/EU trade agreement negotiations.

“It represents a very important effort for Argentina”, said minister Borges in reference to Argentina's willingness to elaborate a tariff reduction proposal that covers 90% of all goods traded with the EU.

“This means Argentina will be part of the MERCOSUR proposal in the event of an agreement with the EU”, added Borges. Given the recurrent delays and under strong pressure from its own industry and agriculture, President Dilma Rousseff was considering the exclusion of Argentina from the trade negotiation round with the EU, and hopefully integrating the 'strategic partner' later on.

Originally the Cristina Fernandez administration had presented a tariff reduction proposal well below the 90% universe of traded goods, which made it difficult to reach a MERCOSUR consensus since Brazil's proposal was 92% and Uruguay and Paraguay's, 90% plus.

But according to the Brazilian minister statement the Argentines finally presented the 90% tariff reduction proposal which opens the way to elaborate on an only list to exchange with the Europeans.

”Now we must find coincidences on the affected sectors (in the event of a tariff reduction), so that they are the same for the four country members; we're united in achieving that goal“, said Borges.

The minister said Brazil was committed with the EU to present next June a formal MERCOSUR proposal, so ”our interest now is to close that agreement (with other MERCOSUR members) as soon as possible”.

Venezuela, the fifth full member of MERCOSUR is not part of the negotiations since it is still in the process of adapting to the group's rules and regulations.