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Mercosur mulls impact of EU-Canada trade deal
by Staff Writers
Brussels (UPI) Oct 18, 2013

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The Canada-EU trade agreement adds new pressure on Latin America to secure a long-delayed free trade deal with European Union partners, analysts said.

Despite European exhortations and incentives, a divided Mercosur -- Southern Common Market -- has yet to put forward a joint position that could benefit its founding members, Argentina, Brazil, Paraguay and Uruguay, plus numerous other associate members and observers. Venezuela was confirmed last year as a full member and Bolivia is awaiting similar ratification.

Chile, Colombia, Ecuador, Guyana, Peru and Suriname are also waiting to become full Mercosur members, raising the group's potential as a lucrative partner for the economically hard-pressed EU.

Despite rhetoric on both sides that a trans-Atlantic free trade zone would benefit both EU and Latin America, Mercosur has lagged behind while Canada got there first, a shock for some Latin negotiators in Brussels, Belgium.

With Canada firmly in place as a major European partner, Latin America will be hard put to secure as beneficial a deal as it might have before the Canadians moved in, analysts said.

Mercosur also stands to lose out to the United States, which is well advanced in negotiations, but for a brief delay caused by recent government shutdown in Washington. In last-minute diplomatic moves U.S. Trade Representative Michael Froman informed the EU financial and staffing constraints would deter U.S. negotiators from traveling.

With the U.S. government back on track, negotiations on a sweeping U.S.-EU trade accord are set to resume soon, while Latin American countries still appear undecided on the basics of negotiating.

Latin American negotiators say Brazil and Uruguay are ready to fast-track an EU trade deal but are being held back by Argentina, which has disputed nearly all proposals on tariff reductions.

Associate member Chile, meanwhile, is in a privileged position as the only Latin American member of the Organization of Economic Cooperation and Development. Chile's OECD role is the envy of other Mercosur states, but Chilean government officials remain keen to go along with a Mercosur deal, too, analysts said.

A free trade deal with Latin America will give Europe a lucrative market and will open, for Latin America, a range of food, minerals and resources markets.

The European Commission announced Friday it reached a trade agreement with Canada that is its first with a Group of Eight country.

The Commission said its president, Jose Manuel Barroso, and Canadian Prime Minister Stephen Harper reached a "political agreement on key elements of the Comprehensive Economic and Trade Agreement," after months of intense negotiations.

The agreement will eliminate more than 99 percent of tariffs between the two economies and expand market opportunities for both parties, the Commission said in a statement.

The trade deal strengthens intellectual property rights and sets out to increase bilateral trade by 23 percent or by $35.5 billion.

The overall benefits of the agreement are expected to raise the level of the EU's annual gross domestic product by approximately $16.4 billion, the commission said.

EU officials say a similar trade deal with Latin America's Mercosur region will help the EU toward an early economic recovery after recent eurozone crises.


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