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Issue #587

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2014 Media Kit
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Merkel wants hurdles removed to EU-Mercosur free trade pact

By: | at 06:10 PM | Channel(s): International Trade  

German Chancellor Angela Merkel assured Brazil that she will do her utmost to bring to a successful end the 15-year-old negotiation of a free trade deal between the European Union and South America’s Mercosur trade bloc.

Merkel, stopping in the Brazilian capital on her way to see the German soccer team play in the World Cup on Monday, said Germany and Brazil, the two largest economies in Europe and Latin America, had much to gain from more trade and investment.

“We have a lot of interest in reaching a free trade agreement between Mercosur and the European Union,” she said in a statement to reporters after meeting with Brazilian President Dilma Rousseff. “I will do what is possible so that we can take a step forward and overcome the obstacles.”

Merkel and Rousseff discussed expanded cooperation in scientific research and the energy sector, including renewable energy, and joint ventures to increase investment flows.

But freeing up trade flows between the two countries has been held back by the drawn-out negotiations of a free trade accord between Europe and the Mercosur trade bloc formed by Brazil, Argentina, Uruguay, Paraguay and, more recently, Venezuela.

Off and on talks have been held since 1999 and were taken up again in 2010 after a six-year freeze. Talks have floundered in the past over European agricultural subsidies and the opening of Mercosur industries to competition from Europe.

In countries like Ireland, farmers fear their meat production cannot compete with the likes of Argentina and Brazil, now the world’s largest beef and chicken exporter.

In the midst of an economic crisis, Argentina has dragged its feet on drawing up a list of European products that would be allowed to enter Mercosur free of tariffs.

Mercosur’s newest member, Venezuela, has been left out of talks with Europe as it is not ready to compete.

Brazil, a regional powerhouse that is seeking more trade to boost its stagnant economy, feels it is being left behind by advances in the negotiation of trade pacts between Pacific nations and between the EU and the United States.

The EU and Mercosur were due to exchange proposals by the end of last year outlining the limits of the duty-free access they are willing to offer in markets ranging from beef to cars to create a pact that would encompass 750 million people and $130 billion in annual trade.

The deadline was extended and the lists are not expected to be exchanged before July, after the World Cup hosted by Brazil. (Reuters)