BRUSSELS (Reuters) - With a seemingly more protectionist U.S. president and the planned EU-U.S. trade accord (TTIP) now in deep freeze, the European Union has turned its attention to elsewhere in the Americas and Asia-Pacific region for partners wanting closer trading ties.
The parties, who launched negotiations in March 2013 and held a 17th round of talks in Sept 2016, account for more than a third of the world’s gross domestic product.
Japan, the world’s third-largest economy, is the EU’s sixth-biggest export market. The EU ranks as the third-largest destination for Japanese goods.
For Japan, it would show it can still do deals despite the demise of the Trans-Pacific Partnership, once a pillar of Washington’s Asia policy.
The EU has estimated an ambitious deal could give an economic boost of up to 300 billion euros, with exports to Japan rising by a third. For Japan, GDP could rise by 0.7 percent.
Japanese Prime Minister Shinzo Abe and EU leaders committed to concluding talks as rapidly as possible and ideally this year. Still there have been similar commitments made to end the talks in 2015 and 2016.
What’s holding it up?
Japan is seeking cuts in EU tariffs on Japanese autos, auto parts and electronic devices. The EU will likely scrap duties on about 80 percent of auto parts imported from Japan immediately after an accord goes into effect, but Japan wants more.
The EU wants Japan to scrap tariffs on agriculture products such as cheese and wine and lower duties on pork, something that has proved problematic. Brussels has also complained about non-tariff barriers to its auto imports.
The EU and Mexico have an existing trade agreement dating from 2000, which removed tariffs on industrial goods. However, the two plan to update it to include services, more agricultural products, more in public procurement, intellectual property and rules to tackle non-tariff barriers.
The EU is Mexico’s third largest trading partner. Mexico is keen to diversify and rely less heavily on the United States, the destination of some 80 percent of its exports.
The EU’s study put potential economic gains from an ambitious deal at 1.8 billion euros per year for the EU and 6.4 billion euros for Mexico.
What’s likely to hold it up?
With customs duties on industrial duties already eliminated, there may be less to discuss, but one EU official close to the talks described the 2017 target as possible but “challenging”.
The partners will need to find a balance between the dairy produce Europeans want to ship to Mexico and the sugar, beef and bananas heading the other way.
Mexico also has reservations about the EU demand for access to public tenders below federal level and the EU model for investment protection.
The Mercosur group of Argentina, Brazil, Paraguay and Uruguay ranks as the world’s fifth largest economy.
The EU is already the number one trading partner for Mercosur, principally importing agricultural products, including beef, soy and sugar and exporting EU machinery.
For the EU, Mercosur is its 10th largest export market for goods and eighth largest EU services. The EU has eyes on the access to public contracts, with the market in Brazil alone worth nearly 150 billion euros ($164 billion)
Talks initially began in 1999 and have stalled at various stages, re-launching in 2010 before being put on hold in 2012. A new exchange of offers took place in May 2016, with a negotiating round - the 28th -- held in March.
What’s likely to hold it up?
Agricultural products - principally beef, but also sugar and soy - is likely to be a key stumbling block. Beef was not included in the EU’s latest offer.
All four countries are major beef exporters, Brazil the global leader, while the meat industry is among the most sensitive sectors in Europe.
Mercosur countries would also have to accept EU industrial goods, including machinery, vehicles and vehicle parts.
The EU is also negotiating deals with other Asia-Pacific countries - agreements signed with Singapore and Vietnam and talks with Indonesia and the Philippines - as well as with India. It also plans to open talks with Australia and New Zealand.
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Reporting By Philip Blenkinsop Editing by Jeremy Gaunt