European Union nations led by France and Ireland have proposed postponing a farm trade offer to South America's Mercosur bloc until rules are agreed to avoid unfair competition, diplomats said on Thursday, creating a potential obstacle to a deal.
In a letter to the European Commission, the countries said they were particularly vulnerable to imports of beef, ethanol, sugar and poultry from Mercosur and said an EU offer of import quotas would be "untimely" until a "level playing field" could be agreed.
The EU farm offer was due to be delivered next week during negotiations in Brasilia. Resolution of the differences over agriculture is crucial if the two sides are to reach a political framework accord by the end of the year, which is Mercosur's goal.
The letter seen by Reuters seeking a postponement was signed by Austria, Belgium, France, Hungary, Ireland, Lithuania, Luxembourg, Romania, Poland, Slovakia and Slovenia.
A counter letter pressing for the EU to make a farm offer next week was signed on Thursday by Germany, Italy, Britain, Denmark, Sweden, Spain Portugal and the Czech Republic, a European diplomat in Brasilia said.
"The last stretch of the negotiations will be difficult," the diplomat said on condition he not be named.
Another European diplomat said negotiations, that have dragged on for 18 years, are at a crucial stage.
"If the deal doesn't get done now, based on where Argentina and Brazil and Europe are politically, it may never get done," the diplomat said.
Previous rounds of talks have left out discussion of beef, sugar and ethanol imports from Mercosur, but Brazil and Argentina would not sign any deal if they are left out now.
Argentina's government warned that there would be no deal this year if the EU farm offer was not forthcoming.
"We expect the European Union to takes its farm offer to Brasilia next week, so we can start the final stage of negotiations," Horacio Reyser, secretary of international economic relations at the foreign ministry, told reporters.
"Clearly, if the agricultural negotiation is excluded there will be no deal at the end of the year," he said.
Mercosur groups Brazil, Argentina, Uruguay and Paraguay. The stop-start-stop negotiations with the EU began in 1999 but have faced resistances on either side, to open up to South American farm products and to European manufactured goods.
Both sides said earlier this year the chances of completing a deal had increased with the arrival of a protectionist U.S. president in the White House. (Reuters)