“Negotiations such as these are challenging but the moment is right to take a fresh look at the state of discussions so far,” EU Trade Commissioner Karel De Gucht said in a statement.

Talks toward a trade deal between the EU and the four Mercosur countries - Argentina, Brazil, Paraguay and Uruguay - were launched in 1999 but hit an impasse in 2004, when negotiators clashed over liberalising trade in agriculture.

Re-launching the talks with Mercosur is a priority for Spain, which holds the EU’s rotating presidency until the end of June.

EU officials say that a deal could boost European exports to the four Mercosur countries by roughly €4.5 billion each year. The European Commission also noted in a statement that the South American bloc “has not yet concluded any free trade agreements with any major competitor of the EU.”

The European Union - the South American bloc’s biggest trading partner and largest investor - accounts for just over one fifth of all of Mercosur’s international trade. Trade between the two regional groupings totalled US$ 84 billion last year alone.

In addition to trade in goods, the proposed deal would also cover services, investment, government procurement and sustainable development.

The negotiations could hit a few bumps as negotiators turn their attention to liberalising trade in agriculture - the subject on which the talks broke down six years ago.

Copa-Cogeca, a major European farmers’ association, warned last week that a trade deal with Mercosur “would lead to a substantial contraction in the EU agriculture sector, threatening 28 million jobs.” The group also argued that producers in Mercosur countries “do not have to comply with the same high food safety, animal welfare, and environmental standards that EU farmers do.”

“We will address any adverse impact on certain sectors with specific measures, in particular in agriculture,” European Commission President José Manuel Barroso said in a statement.

The talks will be officially re-launched at an EU-Mercosur summit in Madrid on Monday. That meeting will also witness the signing of a trade deal between the EU and Colombia and Peru. Negotiations toward that agreement were finalised in March.

ICTSD reporting.

Durante la semana pasada se reunieron en Guatemala los equipos negociadores de Centroamérica y la Unión Europea (UE) para intentar lograr un acuerdo. Los dos puntos sensibles estuvieron en torno al tratamiento comercial del azúcar y de los productos lácteos, en especial la leche en polvo.

Precisamente la UE ha flexibilizado su posición en el renglón lácteo, disminuyendo sus intenciones de obtener una cuota de importación de leche en polvo de 5000 toneladas métricas (TM) a 2000 TM anuales, aunado a una cuota de 3000 TM anuales para sus quesos maduros.

Centroamérica por su parte ofrecer otorgar una cuota de 500 TM de leche en polvo sólo para Panamá, sumada a una cuota de 1000 TM en quesos maduros.

Subsidios europeos en la mesa

Según datos del Sistema de Estadísticas del Comercio Exterior de Centroamérica, la región importa más de 20.000 toneladas de leche en polvo de distintas partes, incluyendo países europeos. Considerando los datos suministrados por el sistema, las importaciones de leche en polvo procedentes de la UE no alcanzarían siquiera el 3% del total de importaciones en ese renglón por lo que se no explica claramente el temor de la industria láctea centroamericana.

Para el sector productivo lácteo, representado en la Federación Centroamericana del Sector Lácteo (Fecalac), el riesgo está en los US$ 13.000 millones al año, que según la industria, la UE destina a subsidios para sus productores. De esta forma no habría manera de competir ante eventuales importaciones de leche a bajo costo y subsidiadas.

Estas asimetrías hacen que los productores centroamericanos exijan la protección del sector productor regional de cuya operación viven cerca de 300.000 familias.

En declaraciones a la prensa local, Joao Aguiar-Machado, jefe del equipo de negociadores de la UE manifestó que el bloque mostró su flexibilidad, y aún más rechazó los señalamientos sobre la rigidez de su postura en la negociación. “Flexibilizar no significa aceptar la posición completa”, acotó.

A primera vista, las posiciones de los dos bloques en torno al tema lácteo son algo complejas, pero se espera que un nuevo acercamiento suceda este próximo 13 de mayo para intentar destrabar las negociaciones.

En la región centroamericana, los mayores productores de leche son Nicaragua y Costa Rica. Este último es el principal exportador hacia Europa y el que mayor oposición hace a las pretensiones europeas.

Los productores no han sido consultados

Para Carla Caballeros, directora ejecutiva de la Cámara del Agro, es injusto que se le culpe a los productores de leche por la suspensión, cuando nadie les ha consultado. Por su parte, el saliente ministro de comercio exterior de Costa Rica, Marco Vinicio Ruiz, afirmó que “no iba a aprobar un tratado que pudiera ser destrozado en el Congreso”.

Lo cierto es que este impasse deberá ser resuelto ahora en conjunto por los presidentes centroamericanos, pasado ya el traspaso de poderes presidenciales en Costa Rica.

En declaraciones a medios internacionales, el portavoz europeo John Clancy declaró que “desafortunadamente, las negociaciones comerciales entre la UE y Centroamérica han sido puestas en suspenso porque no ha sido posible resolver una serie de diferencias pendientes”.

Si bien la leche no es el único punto donde se mantienen trabas, es quizás dónde más se han notado. Aún así, otros temas como el acceso al mercado europeo de los productos que hoy cuentan con los beneficios del Sistema Generalizado de Preferencias Plus, y que en principio gozarían de libre acceso, también son materia de negociación. Asimismo se busca que productos como el azúcar, arroz, carne de res, entre otros, gocen de acceso preferencial al mercado europeo. Y refiriéndose en particular al azúcar, el sector productor regional insiste en una mayor cuota para sus exportaciones a Europa.

No teniendo apuros en culminar la negociación antes de la próxima cumbre de jefes de Estado de Europa y América Latina en Madrid, el empresariado centroamericano confía en que se lleguen a consensos beneficiosos para ambos bloques y se pueda concluir el proceso. Sin embargo, todavía deben resolverse puntos sensibles.

Reportaje de ICTSD y CINPE, fuentes consultadas:

La UE suspende las negociaciones comerciales con Centroamérica (2010, 7 de mayo). CNN Expansión. Consultado el 10 de 2010 en http://www.expansion.com/2010/05/07/economia-politica/1273251804.html

Región y UE le ponen otra pausa al acuerdo (2010, 7 de mayo). Diario El Mundo. Consultado el 10 de mayo de 2010 en http://www.elmundo.com.sv/Mambo/index.php?option=com_content&task=view&id=24586&Itemid=27

Todo o nada: depende de los Lácteos (2010, 8 de mayo). El Financiero. Consultado el 10 de mayo de 2010 en http://www.elfinancierocr.com/ef_archivo/2010/mayo/16/economia2363252.html

Although the jury is still out on the economic significance of the new treaties (the full texts and tariff schedules were not available at the time of writing), some details have been disclosed.

Colombia and Peru gained ‘massive’ tariff savings on sugar and bananas (EU trade commissioner Karel de Gucht dixit; see details under tropical products below), as well as expanded market access for beef, rice and corn. Despite these concessions, there are some voices of discontent, particularly in Colombia. The country’s ranchers are worried about subsidised EU dairy exports overwhelming their small-holder industry. There is also concern over increased imports of European spirits to the detriment of competing local products.

From the EU’s point of view, the biggest market access prize will be duty-free access for all European industrial goods to the two Andean markets within ten years of the treaties’ entry into force (Peru and Colombia are to get full duty-free access immediately). Other areas of the agreement may prove even more significant, including increased protection for intellectual property rights, such as pharmaceutical patents and European ‘geographical indications’.

Parliamentary Approval of Colombian FTA Uncertain

Once the agreements have been signed, they must still be approved by national parliaments. While the Peruvian pact is expected to pass with relative ease, the prospects for Colombia are far more uncertain. A number of parliamentarians, both inside the country and in Europe, oppose it on the grounds that Bogota has not done enough to curb human rights violations. Colombian dairy farmers are also urging the government not to sign the deal until their concerns about a deluge of subsidised EU products have been addressed.

Meanwhile, the European Commission stresses that Ecuador and Bolivia, the other two members of the Andean Community, are welcome to rejoin this ‘common initiative’ whenever they are ready. The talks started as region-to-region negotiations between the two blocs with the intention of concluding an ‘association agreement’ consisting of three pillars: political dialogue, co-operation and trade. The trade agreement was to have a body of common provisions covering a broad array of topics, but differentiated market access commitments for each country. Bolivia and Ecuador suspended their participation in the process due to differences ranging from intellectual property rights to market access, as well as EU financing for development.

Tropical Products Concessions Worry the Caribbean

Many Caribbean Community member states, which signed an economic partnership agreement with the European Union in 2008, have serious misgivings over the Andean deals’ impacts on the trade preferences (full duty-free access) that their exports currently enjoy in the 27-country bloc. In the Peru-Colombia negotiations, the EU agreed to significant tariff reductions on commodities of particular importance to the Caribbean, including bananas, sugar, rum and rice. On bananas, for instance, the duty will be slashed from €148 per tonne today to €75 in 2020, well below the EU’s final most-favoured-nation tariff of €114/t, set to apply as of 2019 at the latest. This means that instead of retaining a post-2019 competitive edge of €114/t over more efficient exporters, such as Colombia, Caribbean banana producers’ preferential margin will be whittled down to just €75 per tonne in 2020. Central American countries, currently in the midst of free trade negotiations with the EU, are expected to get similar concessions on products that compete with Caribbean exports.

The greater presence of sanitary and phytosanitary (SPS) issues on the international trade scene has been driven by the increasing awareness and concern for food safety among European consumers, particularly relating to the presence of chemical residues and various carcinogenic additives in food. This has been exacerbated by repeated ‘food alarms’ and, to a certain extent, by the European Commission’s efforts to tighten and harmonise the EU’s food safety regime, developed in a piecemeal fashion over forty years.

Although the six ACP regional groupings still involved in economic partnership agreement (EPA) negotiations with the EU are worried that the new trading arrangements - slated to replace the unilateral preferences granted by their erstwhile colonial masters - might negatively affect their fisheries sectors, the negotiations present an opportunity, as well as a threat. A number of SPS issues have been the cause of recurring problems in EU/ACP trade but despite considerable discussion over the years, little has been resolved. The fact that the EPAs are a negotiating rather than discussion forum is seen as a way of overcoming this impasse.

What Can Be Done?

Since the European Union’s right to protect its citizens from potentially harmful food cannot be challenged, attention should be placed on the implementation of the measure rather than on the basic principle. This involves looking at what the EU is doing and identifying whether it complies with the WTO Agreement on Sanitary and Phytosanitary (SPS) Measures. The agreement contains areas of ambiguity that allow the EU to introduce measures that, while not at variance with the wording of the treaty, can nevertheless arguably be viewed as being contrary to the underlying intention, i.e. not to interfere unnecessarily with international trade.

Precautionary Import Bans

SPS Article 5.7 allows WTO Members to adopt temporary precautionary bans to prevent the introduction of risks when sufficient scientific evidence is absent. The problem here does not lie with the provision, but rather the agreement’s silence on the steps that need to be taken by a country that has lost market access because trading partners have invoked this provision. Greater clarification is required on how long is ‘temporary’ and on the quantity and type of scientific evidence that is deemed sufficient. The damage caused by temporary bans in the fish sector is well recorded, and in many instances such harm could have been alleviated had mechanisms existed that either helped remedy the fault or allowed scientific evidence to be produced that disproved the basis for the ban itself.

The EPAs represent an opportunity for the introduction of greater certainty about how long is ‘temporary’ and on the quantity and type of scientific evidence that is deemed sufficient.

Setting a Regulatory Ceiling

The SPS agreement sets a regulatory floor but not a ceiling. WTO Members are committed to both the international harmonisation of SPS measures, and the mutual recognition of measures employed by other countries. With respect to mutual recognition, a Member is committed, in principle, to granting equivalence to the SPS measures adopted by an exporting country “if the exporting Member objectively demonstrates to the importing Member that its measure achieve the importing Member’s appropriate level of sanitary or phytosanitary protection” (Article 4.1).

The problem is that, while the agreement sets minimum requirements for WTO-consistent of SPS measures, nothing prevents countries from adopting regulations that are considerably more stringent. Therefore, the question arises whether there is a level sanitary standards that importing countries cannot legitimately expect potential exporting members to achieve.

It could be argued that in exercising their right to require higher than international norms, importing countries also incur an associated obligation to provide a higher than normal level of scientific evidence with regard to the level of extra safety and associated benefits actually being achieved. There have been past instances, such as aflatoxins in nuts, where higher safety levels required by the EU were demonstrated by independent experts to result in practice in the saving of one in a billion people. While all human life needs to be protected, the SPS Agreement does not lay that down as a requirement in the ultimate degree.

Socio-economic Factors in Risk Assessment

The SPS Agreement permits Members to establish SPS measures based on scientific evidence, as well as on broader assessments of risk such as relevant economic factors, including:

• The potential damage in terms of loss of production/sales in the event of entry, establishment or spread of the disease or pest;
• The costs of control or eradication in the territory of the importing Member;
• The relative cost-effectiveness of alternative approaches to limiting risks (Art. 5.3).

Although trade agreements traditionally avoid these types of assessments due to the subjectivity associated with measuring them, the SPS Agreement recognises that imported risks to human, animal and plant safety and health are likely to have a significant socio-economic impact. However, the question remains about how socio-economic assessments can be incorporated into the legitimate justifications based on sufficient scientific evidence. None of the international scientific organisations referred to by the WTO (Codex, etc.) provide much scope for socio-economic assessments.

For the EPAs to be effective, clarification must be obtained on precisely what the SPS Agreement allows the EU to do, and the limitations and obligations that may be cited by ACP countries where specific measures are considered to exceed what is necessary for the adequate protection of health. Without such clarification, these non-tariff barriers will continue to hinder both regional integration and any increased inter- and intra-regional trade.

As a general observation, the SPS provisions in the EPAs fall short of making provision for the post-EPA era. There appears to be an insufficient attempt to allow the recipients to prioritise capacity-building assistance from the EU, and to establish mechanisms to ensure that any such commitments are in fact fulfilled in specified terms of finance, technical assistance and time.

Targeted Capacity-building

The terms ‘capacity-building’, ‘technical assistance’ and’ funding’ are all used freely in the EPA negotiations. Although the EU appears reluctant to support measures that may not have a transparent purpose or application, it is more likely to consider favourably specific requests. SPS standards are an area eligible for support and also represent a prime vehicle for both the EU and ACP countries to make an impact on the development aims that underlie the EPAs.

To assist such consideration a few areas are outlined below:

• Identifying and costing what ACP countries need to comply with the EU SPS legislation requires a move from the broad generalisations that obscure the real requirements. It is clear that not all countries need the same degree of assistance, particularly in product areas such as fish exports, where considerable compliance has already been achieved through the establishment of ‘competent authorities’. There are, however, some countries where export potential exists but its current size is insufficient for the government to establish CAs. The input of relatively small but targeted assistance in such countries may prove highly cost-effective, making them acceptable candidates for EU import purposes and thereby encouraging future development of the fisheries sector.

• Technical assistance should also help solve specific problems of individual ACP countries through customised solutions. This may require lateral thinking that identifies changes in other areas of an economy that could result in a leveraging impact on SPS activities in hitherto moribund sectors of production and processing. For example, in many countries it is not a shortage of finance that is a barrier, but rather its availability at commercially viable rates.

This was a problem for the Eastern European states that needed to develop an energy efficiency sub-sector upon their accession to the EU. The EU tackled this by providing specific sums of money (E3,000,000 to 5,000,000) to each country’s financial sector to be used in providing soft loans and other support specifically for energy projects. The principle is the same for ACP fisheries sub-sectors, and is worth considering.

• Moving beyond the goal of meeting the current requirements and considering how SPS- related assistance can be used to develop new products and assist the fisheries sector to move further up the value chain by exporting more processed products and fewer raw materials.

Spurred by its own need for fish from third countries when stocks are dwindling at home, the EU has a comprehensive framework of assistance designed to promote eligible imports from the fisheries sector. Less well addressed is the need for assisting the private sector in moving up the value chain through the development of processed multi-products.

This not only requires assistance in meeting SPS regulations, but also the creation of a more enabling business environment within which entrepreneurs in the fisheries industry can develop as they have done in other product sectors. Targeted funding under the umbrella of an EPA and focusing on the potential for establishing regional product identity should be considered by negotiators looking to both assist fisheries stakeholders and achieve some progress towards the development aims of the of the EPAs.

As indicated above, the aquaculture sector is a prime area for selective support and could be included as a specific area for funding and technical assistance within an EPA. It would be useful to assist the small and disconnected inland fisheries to produce commercially viable volumes for export and intra regional trade. This could be achieved through the development of community fishery centres, which would offer small scale fisheries cold storage and commercial marketing services. This could also be useful in tackling problems relating to the traceability and origin of fish coming from scattered sources.

• Under its fisheries agreements, the EU has contributed to making various fish processing establishments in ACP countries SPS-compliant. This has served the twin aims of helping these countries export to the EU, as well as the development of local economies. Nevertheless, these establishments can suffer from a shortage of product to process when EU fleets carry their entire locally caught catch back to Europe for processing.

Developing countries should consider requesting the EU to contribute a percentage of the catch of any EU-registered vessel to establish or enhance the processing capacity in the country where the fish was caught. While the development aims of the succession of Lomé conventions that preceded the EPA negotiations were never fully achieved, the economic partnership agreements represent an opportunity for reassessing what was done in the past and identifying what can be done to avoid a similar failure in the future.

Martin Doherty is Head of Research with the international trade consultancy Cerrex Limited in London. The author based this article on his study on The Importance of Sanitary and Phytosanitary Measures to Fisheries Negotiations in Economic Partnership Agreements, commissioned by ICTSD.

Serious obstacles stand in the way of Brussels’s desire to wrap up the negotiations, which started in 2007, this year. India is opposed to the environmental and labour provisions that members of the European Parliament want to see in an agreement. And public health groups around the world have warned that the intellectual property protections in a future EU-India FTA could threaten access to affordable medicine, in India and elsewhere. They have vowed to try to block any deal that does not include explicit safeguards for generic drugs.

During the talks from 28 to 30 April, officials discussed all aspects of the negotiations, with technical talks focusing on rules of origin, trade facilitation, tariffs, intellectual property rights, public procurement, and trade defence instruments like anti-dumping duties.

The EU’s ambassador to India this week suggested that a compromise might be found on environmental and labour provisions, which India views as non-trade issues unsuitable for inclusion in an FTA. “Both EU member-states and the EU Parliament are very eager to find some sort of a language about these issues in the agreement. We know what is India’s position. We are hearing those positions very clearly,” said Danièle Smadja , according to a report in The Hindu, an Indian newspaper.

An issue with more global ramifications is the prospective accord’s provisions on intellectual property. A range of public health groups, as well as several members of European Parliament, have warned that if the EU-India FTA includes certain intellectual property protections that go beyond WTO demands, it could hurt patients all over the developing world.

A 22 April letter from a group of European Parliament members to Karel de Gucht, EU trade commissioner, expressed concern that the FTA may include rules on “data exclusivity” that would limit access to the clinical test data submitted by pharmaceutical companies to regulatory agencies to prove that a new drug is safe and effective. Without access to such data, manufacturers of low-price generic drugs would have to spend additional time and money before their medicines could be brought to market. Competition from generic drugs has led to dramatic reductions in the cost of treating HIV/AIDS and other conditions.

The MEPs, who belong to a new parliamentary working group on innovation, access to medicines, and poverty-related diseases, urged the Commission to ensure that the intellectual property protections being negotiated with India did not go beyond the demands of the WTO Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS).

Indian and EU officials have both insisted that the FTA would not affect access to medicine.

However, according to Michelle Childs, director of policy and advocacy at MSF’s Access to Essential Medicines campaign, they have not done enough to demonstrate that generics would not be threatened.

“Indian Trade Minister Anand Sharma and EU Trade Commissioner Karel De Gucht have both gone on record to say that the proposed FTA would not affect access to medicines from the generic industry,” Childs said. “But neither of them has given a public commitment that the provisions that affect generic competition are off the table. We will continue to fight against these provisions until they are officially and unequivocally out of the free trade agreement.”

MSF calls India “the pharmacy of the developing world,” and estimates that 92 percent of people living with HIV on treatment in low- and middle-income countries currently use generic anti-retrovirals, most of which are manufactured in India.

Civil society groups from Africa, Asia, and South America have expressed concern about the EU-India FTA’s potential ramifications for access to low-cost medicine.

Signs of progress were apparent on a separate intellectual property-related issue that has been an irritant in relations between Brussels and Delhi since early last year: the seizure in European ports of some shipments of generic drugs from India en route to Brazil and Africa. India and Brazil have complained about the harm to patients in need of the medicines and threatened the EU with a WTO dispute for allegedly violating multilateral rules on freedom of transport. While patented in Europe, the drugs in question were not under patent in either the source or destination countries; European officials said that they were held under suspicion of being counterfeit.

Commission officials told Bridges that Brussels is currently revising the relevant EU legislation to ensure that trade in generics is not hindered when transiting through EU territory. While the issue did not directly figure in the FTA negotiations, the EU assured India that the intellectual property chapter of the FTA would include clear provisions to ensure that legitimate trade in generic medicines is not unduly affected when transiting through EU territory, the officials said.

Following a preliminary exchange of views on their agriculture and industrial tariff offers, both sides are believed to be reflecting on how the proposed concessions could be revised. Development campaign groups in India, including ActionAid, have been critical of the EU dairy sector’s push for India to open up its market, warning that competition from the heavily subsidised and protected EU could hurt marginal farmers’ livelihoods.

Indian and EU officials at varying levels of seniority are expected to discuss the FTA talks in meetings scheduled for the upcoming months. The timing of the next round of FTA negotiations will be determined this summer.

ICTSD reporting; “Indian Farmers Won’t Say Cheese,” INTERPRESS SERVICES, 3 May 2010; “Non-trade issues not to hamper trade talks with EU,” THE HINDU, 4 May 2010.

El objetivo de este estudio es ofrecerle a los gobiernos de países en desarrollo y a otras partes interesadas directrices generales acerca de cómo abordar estos temas en negociaciones internacionales, con especial énfasis en acuerdos regionales de comercio (ARC), y tomando en cuenta la experiencia de países como Chile que ya han negociado numerosos acuerdos de este tipo. Muchos de estos acuerdos contienen cláusulas básicas similares que incluyen objetivos, alcances y estándares internacionales mínimos. Hay también un cierto nivel de divergencia en estos acuerdos, especialmente con relación a obligaciones específicas, normas para su cumplimiento y cláusulas para la resolución de controversias. En algunos casos, los países adoptaron reglas para la cooperación y programas para mejorar su capacidad de inspección y control.

El autor concluye que podría haber claros beneficios al introducir estándares laborales en los ARC y brinda ciertas recomendaciones en cuanto a la política a seguir por los países en desarrollo de manera de puedan sacar partido de estas normas.

• The application of the Most Favourable Nation Clause, Article XXIV of GATT and its relationship with EPAs,

• The effects of the “standstill” clause on bound or applied tariff rates applied to ACP countries by WTO members,

• The political and legal effects of the “Non-Execution Clause” in EPAs;

• The articulation of the dispute settlement mechanisms of EPAs and their interactions with the WTO one.

The paper concludes with a series of legal recommendations that could be useful to all stakeholders in understanding the stakes involved in the EPA negotiations.

Some of the issues for ACPs examined by the paper include a discussion of the difficulties of managing and coordinating the various regional groupings in the negotiations, the potential complementarities and conflicts with other existing international agreements (multilateral environmental agreements and WTO agreements), the challenges related to the implementation of new environmental standards, and the settlement of disputes as well as the strengthening of environmental capacities.

The main conclusion of the paper is that the incorporation of environmental provisions within the EPAs may present some benefits to ACP countries. These include increased enforcement of environmental laws and the raising of domestic environmental standards. However, developing countries will have to seek ways to mitigate some risks and challenges associated with internal and regional coordination in negotiations, legal burdens of the negotiating process itself and the implementation of obligations as well as the establishment and maintenance of appropriate levels of environmental protection and institution building. ACP countries will need appropriate packages of technical assistance, capacity building, and environmental cooperation to meet this new environmental agenda in their trade agreements.