(Bloomberg) -- Talks between Europe and South America to create one of the world’s largest trade agreements enter a crucial phase this week as both sides seek to iron out remaining obstacles before a self-imposed deadline next month.
Negotiators from the European Union and the Mercosur customs union that’s made up of Brazil, Argentina, Uruguay and Paraguay are in Brussels from Nov. 29 to Dec. 8 as part of formal talks that resumed last year. The Europeans want more concessions on government procurement and speedier reductions in tariffs, while the South Americans want more access for their farm products.
A deal would not only contrast with rising protectionist sentiments in many parts of the world but would also highlight a shift toward more economic openness in much of South America during recent years. Europe’s trade and investment talks with the U.S., or TTIP, would have created the world’s largest free trade area but stalled. Negotiations with the southern part of the Western hemisphere would still account for a quarter of global gross domestic product and bilateral trade exceeding $100 billion.
Officially both sides continue committed to reaching an agreement before the end of the year, and Argentina is hoping a deal in principle could be announced during a meeting of the World Trade Organization in Buenos Aires in December.
Argentine President Mauricio Macri told Bloomberg News earlier this month that he was bent on signing a deal this year.
Not everyone is as optimistic. The situation surrounding talks is difficult, according to a Brazilian diplomat with knowledge of the negotiations who asked to remain anonymous. EU offers on beef and ethanol last month disappointed.
Brazil’s largest sugar industry group, Unica, said that if, as reported by local press, the EU were to offer a 100,000 ton quota with a tariff of EU98 per ton, that would be "unacceptable."
On the EU side, work is ongoing to prepare for a possible exchange of offers, and member states are being consulted, according to a Commission official.
While countries like Germany have been pushing for swift negotiations, France has been heeding pressure from its farmers not to give too many concessions on agricultural trade, people on both sides of the talks have said.
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