Latin America's five-member trade bloc is in the midst of trying to strike a landmark free trade agreement with the European Union. Talks have been ongoing intermittently since 1998, but Argentine Secretary of Commerce Miguel Braun said Sept. 15 that the Common Market of the South (Mercosur) could strike the deal within two years. This is in spite of ongoing turmoil within Mercosur — and the European Union for that matter. Mercosur is currently embroiled in discussions over whether to allow Venezuela to remain a full member in spite of noncompliance with the bloc's rules. (Caracas now has until Dec. 1 to comply or be expelled.) But Braun noted that Argentina and Brazil, Mercosur's core members, have been collaborating closely on the EU agreement. The two countries have long been out of sync on the issue, with Argentina concerned that EU goods would undermine domestic industry and Brazil looking to the EU as a major trade target amid an economic slowdown. An accord between the two would be noteworthy but would not bring a quick conclusion to talks.
Mercosur and the European Union will meet in mid-October in Brussels to discuss the list of goods and services that will be part of the deal. This will be the first meeting of its kind between the two blocs in 14 years. But, given the state of Mercosur, Braun's optimism is questionable. There have been reports of numerous disagreements over agriculture. The president of the European Parliament, Martin Schultz, visited Argentina and Uruguay this year and noted that some EU member states want to leave agricultural products out entirely. For Mercosur, by contrast, agriculture is key. Uruguayan Foreign Minister Rodolfo Nin Novoa said last month that if the agreement does not include greater access for Uruguayan beef, then there will be no deal.
Dissent within Mercosur is particularly troubling because the bloc makes all of its decisions based on consensus. As a full member, Uruguay has the ability to veto a deal. And Montevideo's stubbornness on beef may not play well with the European Union, where many oppose allowing Latin American beef free access to the market. Earlier this year, EU Commissioner for Agriculture Phil Hogan said that beef was "off the menu" in Mercosur trade talks. European farmer trade group Copa-Cogeca expressed its discontent with any Mercosur deal that would grant more access for products such as beef, wheat and orange juice.
In spite of the confident rhetoric, negotiations over the free trade agreement will take some time to reach a conclusion, as the sides go back and forth over which goods and services should be excluded. And the conflicts within both blocs will not make the process any easier.
