Agriculture, a Minefield for Trade Talks

Farm exports from Mercosur -- Latin America's Southern Common Market -- to the European Union are growing at a snail's pace, but negotiations for a free trade agreement between the two blocs have been at a standstill for over a year, with no hope for progress in sight.

MILAN, Italy - A solution to the agricultural question, crucial for reaching a free trade agreement between the European Union and Mercosur, does not yet appear to be within reach, at least not before the next ministerial conference of the World Trade Organization this December in Hong Kong.

Negotiations between the two blocs have been at a standstill for over a year, and their respective positions remain irretrievably distanced, as was reflected at the 2nd National Conference on Latin America held Oct. 17 and 18 in Milan, a major Italian industrial centre.

The conference included discussions on agriculture, bringing together experts and officials from member nations of the EU and of Mercosur (Southern Common Market: Argentina, Brazil, Paraguay and Uruguay).

"Relations with Europe continue to be strategic for the entire region. We must make a concerted effort to bring our positions closer together, and political will is essential," Ivan Joao Guimaraes Ramalho, executive secretary of the Brazilian Ministry of the Environment, said in comments to Tierramérica, stressing that agriculture is a vital sector in Latin American trade.

The volume of trade between the two blocs has increased considerably, but agricultural exports from Mercosur to the EU have grown at a slow pace.

Brazil, for example, exported six billion dollars worth of agricultural products to the EU in the year 2000, which represented 45 percent of the sector's sales abroad. In 2004, sales to the EU had risen to 11 billion dollars, but accounted for only 37 percent of Brazil's total agricultural exports.

According to figures from the Economic and Social Department of the United Nations Food and Agriculture Organization (FAO), the agricultural sector's share of exports from Latin America and the Caribbean makes up 20 percent of the total, a figure that climbs to 70 percent for Mercosur and the Caribbean.

"The situation is not the same in all countries. Mexico and the smaller countries are increasing their imports and suffering more from the burden of tariffs and subsidies," explained Alexander Saris, director of the FAO Commodities and Trade Division.

The Mercosur countries have been highly critical of the EU. "They offer us ridiculous quotas, far lower than those we currently have, and in return they want us to change our internal regulations on services," stated Jorge Remes Lenicov, the Argentine ambassador to the EU.

For his part, cattle rancher Roberto Symonds, vice President of the Rural Association of Uruguay, noted that the so-called Hilton quota established by Europe for Uruguayan beef "is a mere 6,300 tons, with a 20 percent tariff, as compared to the 20,000 tons allowed by the United States with a tariff of six percent."

The Hilton quota is an agreement with the EU that permits the sale of a certain quantity of high-value cuts of beef with relatively low tariffs.

Outside of this quota, European import tariffs range from 98 to 176 percent, while those imposed by the United States average 20 percent. As a result, Uruguay exports barely 20,000 tons of meat a year to Europe and 165,000 tons to the United States.

"We would like to strengthen relations with Europe to build a multipolar vision of the world, but the European proposals do not correspond to the initial objectives of the negotiations," said Remes Lenicov.

However, Jesús Zorrilla Torras, of the European Commission's Directorate-General for Agriculture and Rural Development, maintained that "European tariffs are consistent with those imposed by other countries."

The disagreement between the two blocs extends to quality requirements for exported goods. "The EU imposes high levels of quality, hygiene, animal health and environmental sustainability that are not open to discussion," said Zorrilla.

The EU currently spends 350 billion dollars annually on subsidies to its farmers. According to the World Bank, a major reduction in this aid would significantly improve living conditions in the countries of the South, where 75 percent of the poor live in rural areas.

For the moment, Europe is waiting for the conclusion of the Doha Round of WTO negotiations, whose objectives include liberalizing agricultural trade by cutting trade-distorting domestic farm support, import tariffs and export subsidies.

The agriculture question is closely tied to the internal situation in both blocs. The EU expanded this year with the incorporation of 10 countries, and must still contend with the rebalancing of subsidies to producers in its member states.

On the other side of the Atlantic, social unrest has pushed governments to defend their economies, in which agriculture has a 20 percent share.

Nevertheless, all sides agree on the need for a strong political initiative to revive European-Latin American negotiations on the basis of a community of values and a new vision of international cooperation.

"South-South relations are growing, and Europe has to be careful that it does not arrive too late," Massimo D'Alema, president of the European Parliament delegation for relations with Mercosur, told the participants at the conference in Milan.

Negotiations with Mercosur, "beyond an economic agreement, should promote the construction of a real political association," he concluded.

* Elisa Marincola is an IPS correspondent.