21 July 1998
EC expected to recommend Mercosur talks

THE European Commission is likely to recommend the European Union (EU) begin talks with five Latin-American countries on a free-trade pact despite anxieties from France and Germany.

Franz-Joseph Feiter, German agriculture under-secretary, warned yesterday a free trade agreement with the Mercosur pact could have “strong negative effects” on agriculture in Europe.

And French farm minister Louis le Pensec said a free trade pact could inflict “serious damage” because the countries were not producing at full capacity.

Several other countries want a study on the effects, including Spain, Irelandand Luxembourg because of worries about the potential effect on talks to reform the Common Agricultural Policy and accords negotiated within the World Trade Organisation.

But commissioners are likely to argue that any talks could include a series of provisions to soften the impact on farms and that the EU economy would benefit in the long-term, reports the Financial Times.

One internal Commission report estimated the EU would have to pay out more than Ecu14 billion ($15.5bn) annually to farmers if it was to compensate them for lossof income resulting from a pact.

Mercosur is not a top priority for the UK. Sweden and Denmark are most in favour of talks.

  • Financial Times 21/07/98 page 6