MercoPress. South Atlantic News Agency

Paraguay will lead Mercosur trade negotiations with the EU next December

Mujica made the announcement following the meeting with his peer Cartes

The Paraguayan foreign affairs ministry will represent Mercosur next December when the exchange of proposals with the European Union for a long pending free trade agreement, announced Uruguayan president Jose Mujica on Friday following private talks with his visiting peer from Paraguay, Horacio Cartes.

“Foreign ministers have agreed that Paraguay will chair Mercosur negotiations with Europe in the event of an agreement, and thus represent us all, and will move forward in the best way possible given the imminent proposal of this region to be taken to consideration for an agreement with Europe by the end of the year”, said Mujica in a press conference next to Cartes.

Mercosur and the European Union have been negotiating a trade and cooperation agreement since 1999 with long interruptions, and talks finally resumed in 2010, but differences persist in the proposals since Mercosur wants greater access for agriculture and the EU in industrial goods and services.

Paraguay that was suspended from Mercosur in June/July 2012 over the removal of then president and now Senator Fernando Lugo ('congressional coup')., has yet to formalize its full return to the group. Paraguay objects the way it was suspended and the incorporation of Venezuela agreed during its suspension.

Because of these 'illegalities and illegitimacies' Paraguay has taken a political approach to the issue with bilateral meetings with all the Mercosur leaders (including Venezuela's Nicolas Maduro), but no formal return to the group although with confirmed commitment.

In his round of contacts the Paraguayan president has already visited Cristina Fernandez in Buenos Aires, Dilma Rousseff in Brasilia, met with Nicolas Maduro in Suriname, with Chile's Sebastian Piñera, a long standing ally of Paraguay and now a member of the Pacific Alliance, and finally Uruguay, traditionally the two Mercosur 'grumpy' junior members.

Cartes arrived to Montevideo on Friday morning and held private talks with Mujica and later with their ministerial teams, --mainly foreign ministers Eladio Loizaga and Luis Almagro--, addressing issues relative to trade, investments, port facilities, waterways, communications and energy. The Paraguayan president made it a point to strongly support Uruguay's project of a deep water terminal on the Atlantic coast.

Last Monday Uruguay and Brazil announced they had their (tariff reductions and products) proposals for the meeting with EU ready and expected that the remaining two, Argentina and Paraguay, would have them on time for December, even when a previous consensus must be reached before talks with Brussels.

The protectionist measures implemented by Argentina and protested by the US and EU before the World Trade Organization, WTO, plus the Mercosur suspension of Paraguay have delayed negotiations with the EU, which demands Mercosur is represented by all members (the four that have been holding talks since 1999). Venezuela which only joined last year is not part of the Mercosur/EU negotiations.

However although Paraguay will represent Mercosur in the exchange of proposals “it does not mean that it will hold the rotating chair of the group, currently held by Venezuela” but which must be passed on to the following member on alphabetical order.

“In practical terms this means Paraguay will be negotiating with the EU in equal conditions as the rest of Mercosur members”, which will also send a strong message to Brussels that conditioned talks to Paraguay's attendance, according to Uruguayan diplomatic sources.

When Mercosur members suspended Paraguay and lowered diplomatic links, the European Union, as well as US and Canada among others, respected the Paraguayan congress decision to remove Lugo. Brussels all along was supportive of the constitutional interim government under president Federico Franco, and recently extended tariff benefits for certain Paraguayan exports until 2014.

At the end of the mini summit in Montevideo, Mujica said that “Paraguay is a piece of our history” and called for energy complementation and to have Brazil join the Paraguay-Parana waterway so they can 'also export their soy and grains' from the heart of the country.

“History unites us bur far more the needs and challenges of the future”, said Mujica and although small in dimension and surrounded by giants “we feel enormously complementary”.

Finally Mujica said that Paraguayans are important for the Uruguayan tourism industry since they have the highest per capita expenditure, but Paraguay has also become the main destination of Uruguayan investments abroad.

Cartes in a clearly conciliatory tone referring to Mercosur said that presidents are 'a mere day of rain' in the lives of countries and underlined that Uruguay and Paraguay share opportunities that are inexorable such as the waterway, access to the Pacific, and the projected deep water port on the Uruguayan Atlantic coast.

“For all this the world is demanding we sit and think on our common interests, because what we don't do others will come and do it”, said the Paraguayan leader.

Later and in that same spirit Cartes said that if Mercosur points to too ambitious targets, they will be difficult to achieve.

“Let's us agree that Mercosur, which is a food factory, must put an end to poverty and extreme poverty in a given timetable, because if we start talking about tariffs and a common currency, forget it, we'll never agree”.