EU-Mercosur Trade Needs Kickstart

"A kind of kick-start would be required" to break the deadlock and lead to a resumption in negotiations at an Oct. 20 meeting scheduled in Lisbon with foreign ministers of the four Mercosur countries, Lamy said at a Brussels news conference on Tuesday.

The European Union and Mercosur members Argentina, Brazil, Paraguay and Uruguay are currently negotiating the creation of a free-trade zone between both trading blocs and have set Oct. 31 as a deadline for completing the negotiations.

The Lisbon meeting will "underline the strategic importance for Mercosur of an agreement with the European bloc," Brazilian Foreign Minister Celso Amorim said during a meeting with his three South American colleagues over the weekend. At the same time, he warned that the trading bloc was not willing to accept just any proposal put forth by Brussels.

Stalled negotiations

Negotiations for the free-trade zone, which began in 1999, have come to a dead end after the two sides failed to reach an agreement on agricultural barriers and the opening up of government procurement processes. The South Americans have called the EU proposal of limiting agricultural imports "unacceptable" and "not even enough to start negotiations."

"We might be flexible in one, two or even three points, but not in 10," Amorim told the Associated Press, stressing that the group would go into the talks "with nothing to hide and offering everything we are in a condition to offer."

Chief on their list of criticisms are restrictive EU quotas for agricultural products. With its eyes on gaining better access to the large European consumer market, the South American bloc has called for removing limits, especially for beef products, one of the region's most important exports.

European diplomats, for their part, have complained that the latest Mercosur offer for the trade accord fell short of EU expectations. Brussels has said its proposal would open a €200 billion ($247 billion) public procurement market for the South American group and would immediately slash 65 percent of the tariffs on industrial goods if Mercosur responded in turn by allowing more European access to the region's investment sector, government acquisitions, telecommunications, marine shipping and banking.

Time pressure

Kick-starting the trade talks takes on new urgency as Pascal Lamy's mandate ends Oct. 31. If no deal is reached by then, the South American bloc would have to negotiate with a new EU trade delegation, which is likely to delay a final agreement.

Lamy, who will be succeeded as trade commissioner by Briton Peter Mandelson on Nov. 1, reiterated his hope that an accord could be reached before his last day in office.

"I always said that I would be sorry if there were no accord before Oct. 31," he said, but added, "substance takes precedence over the calendar."

Once established, the transatlantic trade accord will encompass a population of more than 650 million people. Reaching a deal with the EU is seen as a crucial component for the South American economic bloc to strengthen its bargaining position with the United States in negotiations for the Free Trade Area of the Americas which were originally scheduled to begin on Jan. 1, 2005.