The rationale for renewed negotiations between the EU and Mercosur was multidimensional. Some Latin American countries signed or negotiated free-trade agreements with the USA, and the EU itself also signed such agreements with them in order not to lose trade preferences with the USA on that market (Vaillant, Vaillant 2014: 339).
If the agreement is signed, an area covering approx. 250 million consumers will be created and will generate 5% of the global GDP. European Union enterprises, which are currently responsible for 85% of the EU export to Mercosur markets, are expected to be given preferential access to the markets of the Mercosur countries and experience fewer duties. In some cases, the duties are high, e.g. 20–35% for machinery and equipment, 23–35% for cars. Reduced duties will facilitate access to the Latin American markets in terms of products such as dairy products, vines, alcohol, processed food, pig meat products. Access to cheaper raw materials from Mercosur is relevant to the EU food industry, as well as access to vegetable proteins for animals, while reductions in components used in the European industry will affect the competitiveness of the European industry. It is expected that there will be benefi ts associated with access to services, as well as to the public procurement market, the value of which is estimated at 150 billion EUR in Brazil (Comprehensive Free-Trade Agreement with Mercosur…).
The volume of duties paid by EU exporters is over 4 billion EU a year, excluding costs associated with other barriers; in addition, costs increase due to the requirements concerning a long-term certifi cation and authorisation
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Part III: EU Trade & Investment Policy: Engine for Growth and Job Creation?…process. The costs of the EU export of products such as beverages, olive oil and other vegetable oils to Mercosur is approx. 90 million EUR (The benefi ts of open trade…).
In addition, individual Mercosur countries expect to draw benefi ts, Brazil in particular, which would not only result from the increase in export and import from the EU countries, including for main sectors, e.g. semi-fi nished products for industrial products, and would, as a result, contribute to the increase in the competitiveness of Brazilian products (How two new free-trade agreements…). However, it is assessed that the potential costs and benefi ts for the EU are primarily associated with agricultural sector (Burrell et al. 2011). Also, following liberalisation, the effects may vary for different markets of agricultural products, e.g. beef (Junker, Heckelei 2012: 215–231).
Even though the negotiation process is still long, there is some pressure from the EU to speed up its fi nalisation due to the growing Chinese infl uence in Latin America, also in terms of investments, which at the same time offers a chance to revitalise the European economy. However, Mercosur has some concerns regarding the agreement which may pose a threat consisting of the increased EU infl uence, as well as over-exploitation of resources and population in the region (A potential accord…).
The negotiations of the agreement are carried out with intervals on account of different views and diffi culties in reaching collective decisions.
In the period of 2000–2004 they related to the purpose of the agreement, as Mercosur opted for an in-depth agreement, which was to cover all sectors and instruments. On the other hand, the EU was in favour of a broader agreement which would cover more disciplines, including services and other areas, and argued against the inclusion of the agricultural sector in liberalisation. Thus, the EU was more cautious when it comes to the liberalisation of goods. The discrepancies were related to the degree of involvement of the partners, as the Mercosur countries sought greater concessions in the area of agricultural products and the agriculture of the EU, while the demands of the EU concerned the increase in the access to services (http://www.esf.be/new/esf-eu-trade-policy/bilateral-negotiations/
eu-mercosur/).
On the other hand, the resumption of talks took place in 2010 and focused on the following issues: goods, services in the area of market access and national treatment, including investment, intellectual property rights, competition policy as well as public procurement and the issue of disputes settlement (Vaillant, Vaillant 2014: 345–347). The round was stopped in 2012 and resumed in 2016 (European Commission 2017a).
Małgorzata Dziembała, Trade and Investment Cooperation between…
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The extension of the negotiations resulted also from internal differences within the EU, in particular the agricultural lobby, DG Regio, as well as within some EU countries opposed to excessive opening of agricultural market. It was not conducive to achieving an effective compromise (García 2015: 629). During the 18th round of negotiations, which took place on 3–7 July 2017 in Brussels, the parties confi rmed their commitment to concluding the negotiations quickly (European Commission 2017c).
In conclusion, the negotiation process between the EU and Mercosur is still being prolonged. There are structural problems which slow down the whole process and the lack of transparency in the area of trade in products.
There is also a confl ict of interests between the parties. Mercosur insists on faster access to the agricultural market. On the other hand, the EU supports access to the market of manufactured goods and to the market of services (Vaillant, Vaillant 2014: 337–362).
Conclusions
To sum up, the European Union is developing increasingly intense relations with non-European centres and is at the same time strengthening the existing relations within the trade agreements in order to strengthen its position in the world economy and pursue its own interests by promoting interregionalism. It should be pointed out that currently the Free Trade Area agreements relate to a broad spectrum of cooperation, not limited to commercial issues. For example, the CETA has been signed and the EU is negotiating a free-trade agreement with Japan and Mercosur. The EU and Mercosur maintain deepened relations in the economic sphere as well, which can be seen in both the volume of trade and the fl ow of foreign direct investments. It is expected that if the agreement is signed, a new free trade area between the EU and Mercosur should provide a lot of benefi ts, albeit in a possibly varying scope. However, the disparities that still exist in the positions between both partners pose diffi culties in ending the agreement negotiation process effectively.
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