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Timetable Set for EU-Mercosur Free Trade Agreement - 2002-07-24

Officials from the European Union and Mercosur, in Latin America, have set a new timetable for talks intended to lead to a bloc-to-bloc free trade agreement. Progress is being slowed by the issues of EU agricultural subsidies and problems within Mercosur.

Officials from the European Union and Mercosur, a customs union made up of Brazil, Argentina, Uruguay and Paraguay, will meet again in November and twice next year.

Brazilian economist Sergio Werlang said Mercosur wants the European bloc to drop its high agricultural subsidies.

"Trade negotiations are always very important and I think that the talks with the European Union are always dependent upon whether or not they're going to be more flexible in terms of the agricultural subsidies," said Mr. Werlang. "So as long as we can talk, we keep talking if we get some sort of agreement that will make it more flexible in terms of agricultural subsidies then definitely that will be very positive for the area."

South Americans would like greater access to the European market for their agricultural products, such as meat, poultry and sugar.

European officials are emphasizing the two sides need to discuss rules for competition policies, investment and intellectual property rights.

Problems within Mercosur are also slowing down negotiations. Only Brazil, the group's biggest economy, has so far escaped recession.

Some economists say Mercosur should adopt a common currency, but South America analyst David Fleischer said better times are needed for such a move.

"Until the four countries can have their macroeconomic indicators on the same wavelength as the European Union countries were able to achieve to bring off the euro, it would be somewhat difficult to adopt a common currency," he said.

The EU-Mercosur talks come against the backdrop of the Free Trade Area of the Americas, which is set to be negotiated by 2005. The European Union is scrambling not to lose out in South American markets, while Brazil wants to make sure any deal including the free trade area is beneficial to Mercosur.