Speech Fischler in Buenos Aires over associatie EU-Mercosur (en)

Ladies and Gentlemen,

Let me begin by thanking you for this invitation this evening. You probably know that our visit to Argentina is rather a fleeting one but I am pleased that it coincides with this meeting at such an important stage in our discussions.

I am not going to waste time going into the finer details of EU-Mercosur relations because we're all aware of what they are about, what is at stake, and what the latest developments have been. What I want to do tonight is look at what our relations mean, how CAP reform has enabled us to talk business, and what we must do to get our agreement off the ground.

As always, it is the sensitive issues that are the sticking point. Striking a balance in a relationship that implies Europe cracking open its old agricultural egg, and Mercosur coming up with the readies on industrial goods, services and public procurement was never going to be easy.

Balance and most of all ambition have been essential ingredients throughout the process and I believe we're now close to a position where we can move forward together and secure a substantial deal that is in both our interests.

What has changed? Well Europe's CAP reform for one has turned our agricultural policy on its head and in large part helped us to make moves. It has removed the old reality of fortress Europe, the bulk of our trade-distorting support, and a policy that benefits only a small percentage of Europe's population. What we offer now is a more comprehensive support of rural areas and livelihoods in 25 Member States for less money.

Reform has also brought about a simplified support system that is completely transparent and fully in-line with our international trade obligations. We only have to look at the evolution of our patterns of support to see that there is little basis on which to bring either our international commitments or our reform process into question.

Firstly, the fact that our direct aid system is now tied to the producer's commitment to sustainability, and not to a trade-distorting system of production incentives redresses the balance between support and long-term goals.

It's dealt with the issue of value for money, it answers public concerns, and it continues to shift the emphasis from product to producer; from amber, to blue to green, in WTO speak. It has helped us to reduce our subsidised agricultural exports by substantially more than half, and it will bring our trade-distorting support down by a significant 70% from 1993 levels.

Secondly, reform is in large part responsible for a substantial decrease in price support for all EU agricultural commodities in the last ten years, and thirdly, it has reduced the incentives for surplus production, resulting in a subsequent decline in our net export share for all farm products. Not a bad result for a reform process that set out to redress the balance between the world and domestic markets.

But the fact that the CAP has completely changed rhythm, changed key and changed tune is often either overlooked, or our efforts are just dismissed full stop. Internally, the reform process has provided the necessary boost to public confidence. Externally however, whilst some are starting to realise what we have done and what reform has achieved, others are still lagging behind.

Take for example the WTO negotiations. A greater balance is still required some say; the EU needs to give more. Really? I've already mentioned the distance we've covered on export subsidies and domestic support.

On market access, we are, single-handedly, the most important importer of agricultural products from the developing countries by far, not because of some peculiar fluke, but because of a policy design that affords the poorest countries in the world duty and quota free access to the EU market for many of their farm products, and a whole string of other preferential agreements to the more advanced developing countries.

The EU wants developing countries such as those in the Mercosur to have free market access for at least half of their exports to the developed world. We want differential treatment of the developing countries to allow them to deal with tariff reductions over a longer period and at a pace that is better suited to their needs. But most of all, we want others to come on board and show us what they are prepared to do for their part, and show a real commitment from their side.

So the issue here is not whether we will show more flexibility. It is that there must be some limit to it: this WTO round was never, and will never be about the EU going it alone, and I'm pretty sure you agree that we can't be expected to carry on making concessions left, right and centre whilst others sit back and watch. We can not accept that no matter how much effort we invest, or what we do to enhance our negotiating proposal, it is consistently returned to sender for further improvements.

Ladies and Gentlemen,

This is not just the case in the multilateral discussions. Flexibility and realism also have to be on offer in our bilateral talks as well, which brings me back to the EU and Mercosur, and what we can do for each other. The underlying reason for my visit to Argentina today is to stress the huge opportunities that are open to us if we can secure a deal in the context of our independent negotiations.

I am sure that I do not need to remind you of the enormous potential of an EU-Mercosur agreement. We're not talking about the odd bonus here or there. We are ready to cover all your agricultural requests, and improve market access for Mercosur in three ways:

• by including more commodities under a fully liberalised trade system;

  • by substantially reducing tariffs to boost the trade that is already taking place in a significant group of products of interest for Mercosur; and

  • by providing substantial market access improvements via tariff quotas for sensitive products, all of which open multiple new doors for Latin American producers, particularly given the EU enlargement.

What we need now is to prepare an exchange of improved offers that would allow both EU and Mercosur to see their "beef". Chances to secure an agreement on trade do not come easily and they do not come frequently, something that we are reminded of with every day of no progress in the WTO.

This opportunity to boost our historical and cultural trade ties might last a few months, the benefits that we could secure with a deal however, would last many years, not to say decades. We are all well aware that the door of opportunity is only going to remain open for a very short period of time; we need to grasp it.

The same goes for the WTO, and here again I should emphasise that what we are working for here, and what we are working for with you, is not a case of either or. We only have one bank in which our offers lie, and all the transactions we make have to come out of this one account.

When we talk of our 'single pocket' it's not some conspiracy to try and ease our burden. For us, in agriculture, it's the reality, just as it is for you too when it comes to, say, industrial goods or services.

There is only so far that any of us can be expected to go. It must also be relative to what you've got yourselves, and to what you can offer us, in order to achieve the appropriate balance that would get the support we both need to conclude negotiations.

Ladies and Gentlemen,

The Mercosur-EU negotiations are now at the point that different parties should be prepared to address others' concerns and requirements. The momentum is now picking up and we are now in the unique position that a way is there, if only it could be matched by a will. Margins of manoeuvre are still available and it is important that we capitalise on the progress made, because for reasons that we are all well aware of, the going might not be so good later in the year.

What we have put to the WTO is far less trade-distorting support. What we can put to the Mercosur is a substantial offer that promises far better market access, far fewer tariffs, and far greater opportunities for bilateral trade with the EU. It is an historic opportunity for you, and it is a significant chance for us, and once we can see a carrot on the end of our stick, we'll start walking down the path to mutual gains. We have worked hard for an agricultural trade deal from the word go and there should be no doubt that we want progress at the WTO, and with the Mercosur.

Thank you.