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mercosul_em_sintesis_es_set2014A first meeting to assess opportunities for accords between the Pacific Alliance and Mercosur will take place next November in Santiago de Chile confirmed, and confirmed by Chilean foreign minister Heraldo Muñoz.

The meeting is scheduled for 24 November and the objective is to establish a road map that could lead to a convergence of the open market Pacific countries, Chile, Peru, Colombia and Mexico with Mercosur Argentina, Brazil, Paraguay, Uruguay and Venezuela, which have a more restrictive approach towards the private sector.

“The idea is to discuss different forms for specific accords between the Pacific Alliance and Mercosur, on the understanding that at this stage it is not realistic to think about a tariffs and regulations convergence, given the existing differences,” admitted Muñoz.

The November meeting will be held at foreign ministers level plus representatives from regional organizations such as the InterAmerican Development Bank, the UN economic office Economic Commission for Latin America and the

(ECLAC), ALADI, Latin American integration association plus academics.

The idea of a possible integration was first announced by Chile last June during the summit of Pacific Alliance presidents in Mexico. The Alliance only has three years and its main objective is to promote trade and investments with Asia and the Pacific. Contrary to Mercosur, the Alliance promotes free trade, open markets, a strong private sector with governments limited to regulatory tasks.

MercosurChile also admitted that in the event of a possible convergence between the two blocks a ‘two speed’ approach should not be discarded.

“If some countries can move faster towards integration and are willing to do so, they should be encouraged and be facilitated to move in that direction, while the rest can move at a slower pace but with a common horizon,” said Muñoz.

“You can argue that the Pacific Alliance will move faster and Mercosur has its own rhythm, in a way it meets its own commitments, but we must be aware that a convergence is needed, almost imperative for a strong regional architecture,” added the Chilean official.

Alliance members have a trade agreement with significant tariff reductions for 92% of items traded, represent 36% of the region’s GDP, and over 50% of exports. Uruguay and Paraguay are observers of the Pacific Alliance and have publicly announced they want to join the group, but are limited by the consensus clause that binds all Mercosur members regarding third parties.

EU bilateral free tradeThe EU is currently negotiating a trade agreement with Mercosur as part of the overall negotiation for a bi-regional Association Agreement which also cover a political and a cooperation pillar.

These negotiations with Mercosur were officially relaunched at the EU-Mercosur summit in Madrid on 17 May 2010. The objective is to negotiate a comprehensive trade agreement, covering not only trade in industrial and agricultural goods but also services, improvement of rules on government procurement, intellectual property, customs and trade facilitation, technical barriers to trade.

Nine negotiation rounds (the last one from 22 to 26 October 2012) have taken place since then.

Until now, rounds have focused on the part of the agreement related to rules and the two regions are still working on the preparation of their market access offers. No date has been set yet for the exchange of market access offers.

In 1995, the EU and Mercosur countries signed an Inter-regional Framework Cooperation Agreement, including cooperation on trade-related matters. This agreement is pending ratification to date

Trade picture

Mercosur countries:

  • The EU is Mercosur’s first trading partner, accounting for more than 20% of Mercosur’s total trade in 2012. EU-Mercosur trade in that year was €112 billion.
  • Mercosur is the EU’s 8th most important trading partner, accounting for 3% of EU’s total trade. EU’s exports to the region have steadily increased over the last years, going up from € 28 billion in 2007 to €57 billion in 2013
  • Mercosur’s biggest exports to the EU are made of agricultural products (43% of total exports) and raw materials (28%), while the EU mostly exports manufactured products to Mercosur and notably machinery and transport equipment (46% of total exports) and chemicals (22% of total exports) [data of 2013].
  • The EU is also a major exporter of commercial services to Mercosur (€18.5 billion in 2012), as well as the biggest foreign investor in the region with a stock of foreign direct investment that has steadily increased over the past years and which amounted to €285 billion in 2012 compared to € 130 billion in 2000.

EU-Mercosur (5) “trade in goods” statistics

EU importsEU exportsBalance201120122013Years050-50100Billions

EU-Mercosur (5) “trade in services” statistics

EU importsEU exportsBalance201020112012Years01020Billions

Foreign direct investment

Inward stocksOutward stocksBalance2012050100150200250300

More statistics on Mercosur

EU and Mercosur

• Mercosur was established in 1991 and encompasses Argentina, Brazil, Paraguay, Uruguay and Venezuela which officially joined in July 2012. In December 2012,the Protocol of Accession of Bolivia to Mercosur was signed. This Protocol is pending ratification by all Parliaments in Mercosur countries. The EU has bilateral Framework and Cooperation agreements with Argentina , Brazil , Paraguay and Uruguay .

The EU has bilateral Partnership and Cooperation agreements with Argentina, Brazil, Paraguay and Uruguay.

All Mercosur countries, with the exception of Paraguay, will no longer benefit from the the GSP scheme, as of 1 January 2014, due to their classification as high middle-income countries. However, they will remain GSP eligible countries.

Trading with Mercosur

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On Thursday, October 9, at 11 a.m.:
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Resources:

Mercosur

Portal Oficial MERCOSUL / MERCOSUR

Member states of Mercosur

Pacific Alliance and Mercosur

Mercosur – Trade – European Commission

Mercosur: South America’s Fractious Trade Bloc

MERCADO COMÚN DEL SUR (MERCOSUR) – Casa Asia

Mercado Comun del Sur – Financial Dictionary

Brazil wants to speed Mercosur/Pacific Alliance free trade

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