International Trade Daily | August 29, 2001 | By Ed Taylor
RIO DE JANEIRO--Two days of talks between representatives of the Southern Common Market (Mercosur) and the Andean Community (AC) concluded Aug. 24 with agreement on the terms of future negotiations on a free trade accord that would link the two South American blocs.
Brazilian diplomats who took part in the talks in Montevideo, Uruguay, told BNA Aug. 28 that the representatives of the two blocs agreed on a timetable for future negotiations. They also established that the initial subjects to be dealt with would be a mechanism for resolving disputes, safeguards, norms on the origin of products, and sanitary and phytosanitary standards.
The Mercosur, which groups Argentina, Brazil, Uruguay, and Paraguay, also presented a proposal setting differentiated timetables for the eventual lowering of duties between the two blocs. The AC comprises Bolivia, Colombia, Ecuador, Peru, and Venezuela. Bolivia is also an associate member of the Mercosur together with Chile.
In June 2000, the Mercosur decided to resume negotiations with the Andean Community with the goal of defining a proposal for a free trade agreement by the end of this year.
According to the Mercosur proposal, Brazil and Argentina, the two leading economies of the Mercosur, would reduce duties at a faster pace than Uruguay and Paraguay. This, the Brazilian diplomats told BNA, would mean that in six years from the signing of a trade agreement with the Andean Community, Brazil and Argentina would have eliminated all duties with the Andean nations while Uruguay and Paraguay would take 10 years to reach the stage of free trade.
Brazilian diplomats told BNA that the next round of negotiations was set for Oct. 17-19 in Lima, Peru, when, they stated, more specific details would begin to be addressed. The diplomats also said that the Dec. 31, 2001, target for final proposals remains in effect but admitted it is highly improbable that this deadline will be met.
Talks between the Mercosur and the Andean Community began in 1995 but made little progress. Finally, in 1999 talks broke off and both Brazil and Argentina signed separate bilateral agreements with the AC.
Brazil's accord with the AC cut duties by 10 percent to 100 percent on some 2,700 products, ranging from agricultural to industrial goods.
The first round of talks was held this year in April in Asuncion, Paraguay, leading to the Montevideo encounter of Aug. 23-24.
The Mercosur and Andean Community are, respectively, the largest and second largest trade groups in Latin America. Uniting them in a free trade pact would create a market of 310 million consumers with a total gross domestic product of $1.2 trillion and exports of $128 billion per year, according to Brazilian officials.
Last year, trade between the two groups totaled $5.54 billion, composed of $3.24 billion of Mercosur exports to the AC and $2.3 billion of AC exports to the Mercosur.
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