Interview: Mercosur should seek "balanced" trade with EU, says Argentine economist

by Victoria Arguello

BUENOS AIRES, March 8 (Xinhua) -- Member countries of the Southern Common Market (Mercosur) negotiating a trade pact with the European Union (EU) should seek a "complementary" agreement marked by "balanced ties," Argentine economist Jorge Marchini said Thursday.

The development gap between the South American countries and the EU member states could otherwise prove to be a great disadvantage to the Mercosur bloc, warned the vice president of the Foundation for Latin American Integration (FILA).

"Both are important blocs, but with very different levels of development. The asymmetries could deepen with this accord," Marchini said.

"There are already examples of this type of accord between central and peripheral economies that have deepened imbalances," said Marchini, who also teaches at the University of Buenos Aires.

"In Latin American countries, our productive matrix is very limited, tending to concentrate on primary products with low added value," said Marchini.

With the accord promising a greater market access for each other, Mercosur-EU trade would likely see Mercosur members export agricultural goods or raw materials while importing manufactured products, unless specific policies were put in place, he said.

Bilateral negotiations have been going on for nearly 20 years due in large part to obstacles in the automobile sector. The EU has asked for a rapid reduction in import tariffs, sparking protests from auto parts makers, especially in Brazil and Argentina, said the Argentine economist.

A final accord would result in other sectors having an even more significant impact, such as services, intellectual property rights and public-sector purchases, said Marchini.

For example, a stricter protection of intellectual property rights might generate monopolies and in the case of pharmaceutical industry, lead to substantial price increases for medications and limit the growth of the local generic drug industry.

The bilateral trade deal would carry numerous risks, said Marchini, including possible bankruptcy of Mercosur companies and marginalization of South America's small farmers.

Marchini complained that the secret way by which the negotiations were conducted has made many risks unclear.

"It's inconceivable that while it has been under negotiations for 19 years, the talks are not only secret, but also marked by a lack of transparency," said Marchini.

"There are no impact studies that we know of. We don't know how it is going to impact each sector. What will happen in the wine, textile or automobile markets? It seems they are working on intuition or under pressure or want to wrap up an agreement quickly," he said. Enditem