EU in push to seal Latin American trade deal

An announcement on a deal was not expected Tuesday, although a breakthrough could come from the talks that, according to EU officials, are designed to prepare for an "endgame".

After securing major free trade deals in recent times with Canada and Japan, the EU is now keen to secure yet another market opening, whilst US president Donald Trump heralds in an 'America First' policy of protectionism.

For the EU, trade has become an important tool to secure multilateralism and free trade as the US is withdrawing from treaties and closes inwards - while also creating opportunities for European firms to export.

Talks with the Mercosur countries initially kicked off in 2010, then were paused in 2012, and reopened in 2016.

However, negotiators are working against the clock as a deal is needed to be secured before the campaign for Brazil's presidential and general elections kicks off in March, ushering in a series of elections that would put off any meaningful negotiation until 2019.

No Plan B

"There is no plan B, no exit strategy, we need to finish it and we need to finish it now," chief EU negotiator Sandra Gallina told MEPs last week.

"For the market access part we need political impetus from both sides," Gallina said, adding: "I am in need for big political help if we are to finish this, […] it will be geopolitically very important, this agreement."

Mercosur countries say the EU needs to further open up its own agricultural markets, including beef and ethanol.

The EU offered in December to let Mercosur export 70,000 metric tonnes of beef at reduced tariffs, but Mercosur countries deemed it too low.

While previously France was at odds with opening up the market for Mercosur beef, Ireland has now become concerned about its capacity to export, as its beef could also face UK tariffs after Britain leaves the EU.

"The moment is difficult for Europe, beef in Ireland might be affected by Brexit, so this maybe not the best time to go after such a deal," Gallina admitted last week.

But the negotiations are not only about beef.

The EU wants Mercosur countries – a region of 260 million consumers – to open their markets more significantly to dairy products, particularly cheese, cars and car parts, have access to maritime services, and reach an agreement on rules of origin and geographical indicators.

The EU has called for an "ambitious and balanced" trade agreement. The EU-Mercosur trade in 2016 amounted to €85 billion.

The deal will not cover investment provisions, thus there is no need for any sort of dispute mechanism, a controversial issue in previous trade deals.

The EU is still negotiating with Japan the precise investment dispute mechanism to include in the economic agreement.