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INVESTMENT REGIMES IN THE EU-MERCOSUR NEGOTIATIONS, by Christian Russau, FDCL, Berlin, September 2005

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Chapter 3. Investment Regimes in the EU-MERCOSUR Negotiation Poker: Analysis of the Period from March 2004 to October 2004

After signing an agreement on inter-institutional cooperation in May 1992[21], MERCOSUR and the European Community signed a framework agreement[22] on the start of negotiations on a free trade agreement. In 1997, the EU signed a similar 'fourth-generation' agreement with Mexico, which came into force in October 2000 (also called the 'Global Agreement'); and in February 2003 the association agreement with Chile, signed in November 2002, came into force.
At the summit meeting of EU, Latin American and Caribbean Heads of State and Government in June 1999 in Rio de Janeiro, the EU and MERCOSUR established the negotiation modalities such that since late 1999 both parties have been negotiating at the sessions of the 'Biregional Negotiations Committee' (BNC) on an 'inter-regional association agreement'. The negotiations follow the 'single-undertaking' principle: 'nothing is agreed, before all has been agreed'; they are formally based on the three components of 'cooperation', 'political dialogue' and 'trade issues'.
The EU Commission and the four MERCOSUR governments seem to have come to a relative consensus on the elements 'cooperation' and 'political dialogue', but there is clearly no such understanding as regards the 'trade' sector. MERCOSUR insists (not least due to enormous internal pressure from the well-coordinated agro-business) on improved access to European agricultural markets, in contrast to the market-liberal wish list of the Europeans. The EU requests:

• 'market access', 'investment securities', and legal commitment to 'national treatment' (NT) for the investment sectors,
• general analogy with the four GATS modes (mode 1 cross-border supply, mode 2 consumption abroad, mode 3 commercial presence, mode 4 presence of natural persons) for the services sector,
• imposition of patents and 'geographic indicators' (GI) (for instance for wine ( 'Rioja') or cheese ('Parmesan')), etc, for the Intellectual Property sector,
• legal mechanisms to guarantee access to the MERCOSUR public-procurement market.[23]

In the negotiation topic 'investments', these international negotiations affect the politically rather relevant issue of the condition of the possibility for decision making in the field of industrial policy of the respective countries - on national, regional and local levels. And with respect to this, binding rules consistent with the principles of general national treatment and free capital flow are very high on the EU agenda. International treaties - be they regional free trade agreements like the one currently being negotiated between the EU and MERCOSUR, or bilateral investment-agreements[24] - have legal priority over national, regional or local policies, so that eventually the condition of the possibility for decision making in the field of industrial policy might be radically curtailed if the Europeans impose their will.

During the negotiation meetings between May and September 2004, Brazil was ostensibly the most determined of the four MERCOSUR delegations to maintain the condition of the possibility of national industrial policies, both in the opinion of the Europeans as well as of MERCOSUR. According to the unequivocal viewpoint of Brazil, it cannot be automatically subordinated to international legally-binding treaties. As press reports from the past few months reveal, Argentina has not only been moving towards this position, but in the meantime is obviously planning to make even more vehement use of it than Brazil has.[25]

At this moment, the open points on the EU-MERCOSUR negotiating agenda mainly concern the various negotiation documents (such as 'offers', 'requests', 'minimum requirements', 'sideby-side' and 'consolidated texts') that are relevant for the politically sensitive 'investments'sector. The 'offers' are made up of the horizontal as well as the specific concessions for each investment sector[26] (note that the services sector affects above all the area of policies and law in 'Mode 3 - Commercial Presence'[27]), the 'requests' contain the mutual demands of the negotiating parties, and the 'minimum requirements' contain the minimal pre-condition each party demands from the other to start negotiation talks; the 'side-by-side' and 'consolidated' texts are drafts and negotiation documents respectively that both sides have already revised together.
Of the few negotiation documents that have been published or leaked[28], Brazil's offer in the services sector of 30 March 2004[29] still revealed considerable reservations regarding 'investment securities'. 'Brazil's Initial Offer in Services' of 30 March 2004 was as follows:

MERCOSUR-EU
BRAZIL'S INITIAL OFFER IN SERVICES
(Footnote: *Brazil's initial offer is subject to substantial progress in the agriculture negotiations*)
I. HORIZONTAL COMMITMENTS
ALL SECTORS INCLUDED IN THIS SCHEDULE
All modes of supply:
The Brazilian Government reserves its right to suspend temporarily the commitments inscribed in this schedule of specific commitments in one(some) of the sector(s), sub-sector(s) or mode(s) of supply
Measures resulting from decisions adopted for ensuring competition are not to be considered incompatible with the specific commitments inscribed in the Brazilian schedule of specific commitments and therefore cannot be used as a basis for compensation claims for any adverse effects that they may cause to foreign services and/or service suppliers.
ALL SECTORS INCLUDED IN THIS SCHEDULE: LIMITATIONS ON MARKET ACCESS
Mode 1) Cross-border supply: Unbound
Mode 2) Consumption abroad: Unbound
Mode 3) Commercial Presence: In accordance with laws and regulations that rule foreign investments in Brazil, all foreign capital invested in Brazil must be registered with the Central Bank of Brazil to be eligible for remittances. The Central Bank establishes procedures related to the remittances and transfers of funds abroad. Foreign service suppliers wishing to supply a service as a juridical person must be organized as a legal entity foreseen by the Brazilian law, subject to the dispositions of the Brazilian Civil Code ('Código Civil'). Brazilian law establishes for juridical persons a separate existence from the person of its holders, thus granting the juridical person with individual existence. Consequently, a juridical person has full title and responsibility for their patrimonial rights and obligations. An entity earns the condition of private law juridical person when the corresponding incorporation act (By-Laws and/or Articles of Association) is duly filed with the appropriate Entities Public Registry (EPR). It is mandatory that the EPR records contain the following data on the juridical person:
i) its denomination, purpose and location of head offices; ii) the description of its management, including active and passive, judicial and extra-judicial representation; iii) the process of amendment of the management provisions; iv) the provisions regarding the liability of the officers for its acts; and v) the provisions concerning its termination, including the destination of its assets. Juridical persons referred to as 'sole proprietorship' and 'partnership' are not considered as such under Brazilian law. A joint venture may be accomplished by a capital association through the formation of any type of business organisation as set forth in the Brazilian law (usually a Private Limited Liability Company - 'Limitada' - or a Corporation - 'Sociedade Anônima'). A joint venture may also be carried out through a 'consórcio', which is neither a juridical person nor a form of capital association. A 'consórcio' is used mainly with major contracts for rendering of services. It is a contract between two or more enterprises for a joint accomplishment of one specific undertaking. Each associate in a 'consórcio' maintains ist respective organisational structure. Unbound for subsidies.
Mode 4) Presence of Natural Persons: Unbound[30]

At the meeting of the 'XIII MERCOSUR - EUROPEAN UNION Biregional Negotiations Committee' in early May 2004, the European Commission, represented by DG Trade, reacted to this 'Services - Brazil's Initial Offer March 30, 2004' by strongly insisting that Brazil had to make more comprehensive concessions with regards to market access (MA) and national treatment (NT), above all in the first three of the four services sectors ('modes'), in analogy to GATS.

Accordingly, on 22 April 2004 the EU asked for a fundamental adjustment in mode 1 ('crossborder supply') and mode 2 ('consumption abroad') by the Brazilian delegation[31]: the EU negotiators stated with regret that Brazil had horizontally excluded ('unbound') these sectors in its market access offer for services of 30 March 2004. The Commission declared in April 2004:
'The coverage of mode 1 is very limited for this important mode of supply, in particular for Brazil (no commitments) and for Paraguay. It is essential to extend the coverage of mode 1, in particular with regard to: computer-related services; other business services; telecommunications; financial services.'[32]

The sector relevant for investments (mode 3: 'commercial presence') is evident in 'Brazil's initial offer, March 30' on services: maintaining obligatory registration, capital transfer via the Central Bank of Brazil, and, among other conditions, recognising the validity of Brazilian legislation, which future provisions in the EUMERCOSUR-treaty should not undermine. Yet the EU Commission was not satisfied at all with the offer made by Brazil. Up until the present day, Brazil in particular has constantly received separate requests from the EU Commission in the EU-MERCOSUR negotiations. The following is an example from the sector 'financial services':

'Brazil: There are minor improvements for Brazil compared to GATS which do not even include the outcome of the 1998 GATS further negotiations. With regard to insurance, two elements must be included in the offer: a) commit with regard to the whole Maritime and Transport (MAT) on mode 1 and 2; 2) commit on re-insurance and retrocession on mode 1, 2 and 3. With regard to banking, the possibility to authorise the establishment of foreign banks on a case by case basis devoids commitments of much of their value and legal certainty, and must be eliminated.'[33]

The EU negotiatiors saw too many 'restrictions' in mode 3 ('commercial presence') of Brazil's offer for the service sector of late March 2004[34], especially from Brazil. The EU does not perceive that these 'restrictions' are very limited in Brazil anyway - no more than the last (post-crisis) 'sheet anchor'. At the centre of the EU critique is the Brazilian reservation, according to which cross-border capital transfer regulations are the competence of its Central Bank, so as to be able to take appropriate measures against an abrupt capital exodus when a crisis threatens the country, as happened in Argentina in late 2001. Nor does the still quite realistic crisis scenario of balance-of-payment risks in a region already weighed down by debt service and interest repayment stop the EU from demanding complete deregulation. The EU Commission remains silent on the remaining space for political action that MERCOSUR governments would still have in a crisis.

The EU Commission was also extremely irritated by the restricted offer the four MERCOSUR member states made for the 'environmental services' sector in April 2004:

'Environmental services. The improved offer only includes some limited commitments by Uruguay. There should be comprehensive commitments by all Mercosur countries in all modes of supply.'[35]

In addition to sewage, waste disposal, sanitary installations and plants, 'environmental services' also include the highly sensitive area of 'drinking water', for which the EU wants a cross-border liberalisation, somewhat to the benefit of internationally operating European water companies. Coupled with comprehensive regulations for investments (in which the 'law certainty for investors' acts as exploitation logic implemented through an international treaty), the human right to water as an essential element of life would become completely subject to market logic. Price limits on water imposed by the state in the wake of an acute financial crisis, as for instance in Argentina in 2001, would be forbidden under an international treaty if the EU Commission imposes its demands in the negotiations: liberalised market access; the principle of national treatment of foreign investors; the elimination of the scope states have to create their own foreign direct investment policies; the inevitable regulations on liberalising profit transfers; etc.

The negotiation documents exchanged at the end of 2004 treated the sensitive area of water only with respect to sewage[36], which at first sight seemed a victory due above all to the persistent efforts of non-governmental organisations, which had been accusing the EU Commission of demanding the unilateral liberalisation of the developing countries' water supply in the WTO/GATS negotiations. However, a second look reveals a different picture. The Europeans do not demand the liberalisation of water in the chapter on services in the EU-MERCOSUR negotiations; they disguised it rather cleverly in the chapter on investments. And there the concepts regarding the areas of electricity, gas and precisely water supply, too, which the EU negotiators directly dictated into the negotiation document[37], read in unison as follows: 'RESERVATION TO BE CLARIFIED AND BETTER DEFINED':

 

E ELECTRICITY, GAS AND WATER SUPPLY	Limitations on market access	Limitations on national treatment
40 Electricity, gas, steam and hot water supply 4020 - Manufacture of gas except petroleum gases and derivatives 4030 – Production of steam and hot water	<DIR> None, except A, B A: Unbound (RESERVATION TO BE CLARIFIED AND BETTER DEFINED) B: Unbound (RESERVATION TO BE CLARIFIED AND BETTER DEFINED) </DIR>	<DIR> None, except A, B A: Unbound (RESERVATION TO BE CLARIFIED AND BETTER DEFINED) B: Unbound (RESERVATION TO BE CLARIFIED AND BETTER DEFINED) </DIR>
<DIR> 41 Collection, purification and distribution of water </DIR>	<DIR> None, except A, B A: Unbound (RESERVATION TO BE CLARIFIED AND BETTER DEFINED) B: Unbound (RESERVATION TO BE CLARIFIED AND BETTER DEFINED) </DIR>	<DIR> None, except A, B A: Unbound (RESERVATION TO BE CLARIFIED AND BETTER DEFINED) B: Unbound (RESERVATION TO BE CLARIFIED AND BETTER DEFINED)[38] </DIR>

Until now, regarding government procurements, the Commission has not ceased to request 'transparency' and 'market access' regarding public calls-for-tender in the four MERCOSUR countries. The Brazilian negotiators in particular have refused to submit an offer that would exceed 'transparency'. Now transparency in the sense of the EU Commission does not mean 'democratic control of public spending', but transparency in all calls-for-tender, so as to secure new, profitable markets in the interest of European corporations. In May 2004, the EU Commission requested:
'The EC indicated which sectors are considered of key interest in an eventual future Mercosur offer. These are procurement by entities operating in the water, transport and energy sectors, indistinctively of their position at central or subcentral level. In general terms, contracts (including public works concessions) related to infrastructure are a priority for the EC.'[39]

Indeed, the EU repeatedly declared (even word-for-word, as in the GATS-2000 Requests directed at 72 states), that it was not 'seeking the dismantling of public policies or the privatisation of state-owned companies'.[40]

However, the pressure for privatisation is a priority in the austerity programmes of the International Monetary Fund and the World Bank, on the one hand; and on the other hand, the above-mentioned appeal to liberalise public procurement just demands consent to an internationally binding legal construction under which public expenditure exceeding a certain sum has to be internationally published, in accordance with 'non-discriminatory rules'.
Admittedly, according to the latest negotiation proposals of 2004, bidders from MERCOSUR enjoy a certain preference in the planned free trade agreement between the EU and MERCOSUR. Nevertheless, it remains quite questionable as to how such an obligation to invite for tender all internationally operating suppliers could not promote precisely 'the dismantling of public policies or the privatisation of state-owned companies', and, at the same time, enable states to continue their autonomous policies of promoting and preferring their regional and local economies vis-à-vis foreign (in the case of the desired agreement: European) competitors?

In the 'investments' sector, the EU once again highlighted, in its 'Investment-Request'[41] to MERCOSUR of 22 April 2004, that it did not intend any 'dismantling of public policies' or 'privatisation of state-owned companies'[42], though nonetheless, it emphasised its interests:
'The EC proposes that Mercosur's initial investment commitments are revised in accordance with this request. The EC is both seeking improved commitments and clarification of existing commitments as set out in this Request. The EC is furthermore looking for a reduction in scheduled limitations whether these are horizontal or sector specific in nature'.[43]

It then highlighted in the access requests in the specific sectors:

'Specific Sectors
[...]
Brazil
Fishing, mining, manufacturing of motor vehicles, electricity, gas and water production are completely unbound.
EC request: to take commitments in these sectors. These are key sectors of interest to European investors.'[44]

It would be difficult to express the EU negotiatiors' goal with respect to the valorisation of central economic sectors in the interest of European capital more unambiguously than with 'these are key sectors of interest to European investors'.

The BNC met again in May 2004, and in the 'General Conditions for Mercosur´s Offer', MERCOSUR declared its support for a strict positive list for specific offers in the investment sector.

'When no reference is made to one or more MERCOSUR countries for a specific sector or subsector, it should be interpreted that that country or countries are not taking any commitments for that specific sector or sub-sector.' [45]

Contrary to this, the EU negotiatiors insisted on eliminating the whole paragraph[46], which would in consequence mean the variant negative list.[47]

The MERCOSUR negotiation offer in the 'investment' sector went on to explain:

'Taking into consideration the established principles of the applicable multilateral agreements, the disciplines of the Investment Chapter shall not be interpreted or used as a limitation to the prerogatives of domestic regulation and of the adoption of new regulations in order to attain national policy goals.
Tax legislation and any measures relating to taxes shall not fall within the scope of the regulations contained in the Investment Chapter.'[48]

Again, the EU insisted on the elimination of a whole paragraph, this time with respect to a tax-exemption regulation.[49] The EU also wanted to eliminate the restrictions on investment provisions at federal level, submitted by Argentina and Brazil[50], and the EU Commission manifested its extreme disappointment after the exchange of the 'improved offers' of May 21/22[51], since the MERCOSUR offer in the investment and trade-related policy-making sector still only related to the federal level. The Commission had already deplored this in April:

'It is also understood that for the EC it is an important condition that the sub-federal level of government and tax measures are not excluded from the provisions of the agreement and from each Party's schedule of investment commitments.'[52]

The negotiation poker intensified in June 2004: on the MERCOSUR side, the sensitive investment sector, together with services and public procurement, crystallised as the most difficult negotiation topic; on the EU side, it was the agricultural sector. The complete document 'MERCOSUR - Improved Investment Offer - Horizontal Commitments'[53] of June 2004 lists a number of limitations by the four MERCOSUR member states with respect to market access and national treatment, which - according to comments by the EU negotiatiors - have to be eliminated without replacement:

• the condition of the possibility to take autonomous measures with respect to horizontal market access and national treatment, as well as the introduction of specific investment regimes (above all in Brazil),
• the condition of the possibility of performance requirements[54] (Paraguay),
• restrictions on land purchase (Argentina, Paraguay, Brazil),
• reserving the capacity to control privatised stock companies and special share arrangements, such as 'golden shares' (Argentina),
• the condition of the possibility for subsequent law modifications in the interest of consumer and environmental protection (Uruguay),
• national programmes for domestic producers of any goods[55] (Paraguay),
• the capacity to adopt statistical-control measures with respect to foreign direct investments (Uruguay),
• domestic quota regarding acquisitions by foreign investors (Uruguay, Brazil),
• minimum domestic quota regarding staff and directors in accordance with Brazilian legislation (Brazil),
• requirements and measures regarding technology transfer (Uruguay, Brazil),
• the right to fiscal incentives and other measures and requirements in the interest of national industrial and development policies [56] (Brazil),
• requirements on technology transfer as an inherent element of the contractual clauses concerning the intellectual property rights (Brazil),
• and general demands for autonomous national development policies with the capacity to explicitly exclude the national treatment of foreign investors (Brazil),[57]
• as well as the explicit preferential treatment of small and medium domestic companies according to Brazilian law[58].

To ensure comprehensive protection of their regulation sovereignty on the one hand[59], as well as for the contractual recognition of the existing asymmetries between MERCOSUR and the EU on the other hand, Brazil, above all, but increasingly Argentina, too [60], is demanding measures and regulations in the industrial policy sector that would also affect foreign direct investments, which it did in the 'side-by-side' text 'investments' of the meeting of May 3-7, 2004:

'[R]ecognizing the asymmetries existing with respect to the degree of development of regulations. [...]
This Chapter does not apply to policies of incentives for technological and industrial development, or to social and environmental policies, at the central, regional or local level' [61].

This stands in contrast to the EU, which at the time preferred to leave a blank space at the same paragraph in its text proposal.[62]

In the 'side-by-side' text 'services' of the meeting of May 3-7, 2004, MERCOSUR had predefined:

'This provision shall not restrict the right of parties to regulate and to introduce new regulations in order to meet national policy objectives' [63], whereas the EU side wished at most to express its 'good faith' 'in order not to undermine the conditions of each Party`s service suppliers'.[64]

The EU and MERCOSUR negotiation delegations met in September 2004 in an attempt to meet the negotiation deadline (on October 31, 2004 due to the EU Commission change). In section II ('Sector Specific Commitments') [65] of its investment sector offer [66] MERCOSUR liberated several investment sectors like 'mining', 'agriculture' and 'manufacturing [67], which had not been comprehensively liberated before: completely in some sub-sectors ('none'), or with limitations in others. However, in section I ('General Conditions'), MERCOSUR redefined as an indispensable condition the possibility for active industrial policy-making:

'This offer is based on the assumption that the flexibilities determined by national laws and regulations are recognized. Thus it shall not be interpreted as a limitation to domestic regulation or to the introduction of new regulations with a view to achieving national policy objectives, in accordance with the main objectives of this agreement.

This offer is also based on the assumption that the Mercosur-EU agreement shall not interfere with existing bilateral agreements relating to taxes and tax measures or with the capacity of Mercosur countries to pursue the objectives of their fiscal policies.' [68]

Shortly before the EU delegation mandate expired on November 1, 2004, the negotiations failed - at least provisionally. During their meeting in September 2005, the MERCOSUR and EU delegations agreed on a new schedule for two BNC working meetings for late 2005 and early 2006. They also agreed on a ministerial conference in early 2005 in preparation for the summit of Heads of State and Government from Latin America, the Caribbean and Europe in May 2006 in Vienna. After their early September meeting, the parties leaked the information that an agreement had almost been reached in the investment and public procurement sectors, which had until then been quite controversial, whereas services and agriculture still required considerable discussion.[69] In addition to this, there are increasing signs that MERCOSUR might be granted special conditions which would allow its members to implement the reciprocal agreements with some delay - in the sense of a 'temporary special and differential treatment (S&D)' [70], yet not a fundamentally different treatment, adapted to their respective developments.[71]

If this estimation of a 'comprehensive agreement' in the investment and public procurement sectors proves to be correct, the space MERCOSUR has for creative investment policymaking would come to an end very soon, and yet another irreversible step towards the regulation of deregulation would have been taken. This is rather in the interest of transnationally operating corporations, not least European ones.

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Footnotes:
21] Acuerdo de cooperación interinstitucional entre el Mercado Comun del Sur y las Comunidades Europeas, Santiago de Chile, 29 May 1992.
22] Inter-regional Framework Co-operation Agreement, Official Journal L 069, 19/03/1996 pp. 0004 - 0022 - L 112 29/04/1999 P. 0066, <http://europa.eu.int/comm/external_relations/mercosur/bacground_doc/fca96.htm>
23] See Russau, Christian: 'Präferentielle Handelsabkommen und Exporthybris - Multi- und Bilateralismus in der politischen Freihandelsagenda zwischen EU und Brasilien', in: FDCL EU - MERCOSUR Bulletin Nr.2, 3 September 2004.
24] See extensively in Chapter 4 of this paper.
25] See: Valor Econômico, 30 August 2005.
26] 'Horizontal Commitments' 'and 'Specific Commitments'.
27] For the following see also: Russau, Christian: 'Deregulierung nationaler Märkte durch Regulierung internationaler Handelsregime. EU-MERCOSUR Verhandlungen: EU-Kommission, vertreten durch DG Trade, fordert weiterhin Liberalisierung des brasilianischen Wassermarktes, weitere Zugeständnisse bei Dienstleistungen, Investitionen und Öffentlichem Beschaffungswesen', FDCL, May 29, 2004.
28] The EU Commission in particular has to accept that the accusation of total intransparency is well founded. In October 2004 MERCOSUR published their own offers on the web, an act which was immediately interpreted as a breach of the negotiation rules.
29] Services - Brazil's initial offer March 30, 2004.
30] Mercosur - European Union - Services. Brazil's Initial Offer, March 30, 2004, p.4; on the legal status of the terms 'none' und 'unbound' see: 'Where there are no limitations on market access or national treatment in a given sector and mode of supply, the entry reads NONE. [...When] a Member wishes to remain free in a given sector and mode of supply to introduce or maintain measures inconsistent with market access or national treatment, the Member has entered in the appropriate space the term UNBOUND.' For a guide to reading the GATS schedules of specific commitments and the list of article II (MFN) exemptions, see: <http://www.wto.org/english/tratop_e/serv_e/guide1_e.htm>.
31] Minimum requirements for Mercosur offer on Services, 22 April 2004, p.1.
32] Minimum requirements for Mercosur offer on Services, 22 April 2004, p.1.
33] Minimum requirements for Mercosur offer on Services, 22 April 2004, p.1.
34] See Chapter 2 of this paper.
35] Minimum requirements for Mercosur offer on Services, 22 April 2004, p.1.
36] MERCOSURL offer - Services, date unclear.
37] MERCOSUR-Improved Investment Offer - Sector-Specific Commitments, June 2004.
38] MERCOSUR-Improved Investment Offer - Sector-Specific Commitments, June 2004
39] Thirteenth Meeting of the MERCOSUR - EUROPEAN UNION Biregional Negotiations Committee, 3 - 7 May 2004, Brussels - Belgium, Final Conclusions, unabridged version
40] Investment. Request from the EC and its Member States (hereinafter the EC) to MERCOSUR, 22 April 2004.
41] Investment. Request from the EC and its Member States (hereinafter the EC) to MERCOSUR, 22 April 2004.
42] Investment. Request from the EC and its Member States (hereinafter the EC) to MERCOSUR, 22 April 2004, p.1.
43] Investment. Request from the EC and its Member States (hereinafter the EC) to MERCOSUR, 22 April 2004, p.1.
44] Investment. Request from the EC and its Member States (hereinafter the EC) to MERCOSUR, 22 April 2004, p.2.
45] 'The offer of the MERCOSUR countries is presented on a positive list approach, in accordance with what is stated in the methods and modalities document approved at the IXth Meeting of the Biregional Negotiations Committee (CNB).' in: Biregional Negotiations Committee MERCOSUR - EUROPEAN UNION: Investment -improved MERCOSUR offer, 21 May 2004, p.1.
46] MERCOSUR - EUROPEAN UNION: Investment - improved MERCOSUR offer, 21 May 2004, p.1
47] On the structure, function and risks of a negative list in contrast to those of a positive list, see: Russau, Christian: 'Durchsetzung internationaler Handelsregime zwischen der Europäischen Union (EU) und dem Gemeinsamen Markt des Südens (MERCOSUR)? Ausländische Direktinvestitionen als Gegenstand der Freihandelsverhandlungen im Spannungsfeld von Investorenrechten, Entwicklung und Menschenrechten', in: FDCL: EU-MERCOSUR Bulletin N°1, January 2004, p.61.
48] Investment. Request from the EC and its Member States (hereinafter the EC) to MERCOSUR, 22 April 2004, p.2.
49] Investment. Request from the EC and its Member States (hereinafter the EC) to MERCOSUR, 22 April 2004, p.2.
50] 'Argentina and Brazil, as Federal Republics, and in accordance with their Constitutions, restrict their commitment only to measures corresponding to the federal level of government.' - EU note: 'Eliminate'.
51] 'Proposta do Mercosul não agrada à UE', in: Folha de São Paulo, 25 May 2004.
52] Investment. Request from the EC and its Member States (hereinafter the EC) to MERCOSUR, 22 April 2004, p.2
53] MERCOSUR-improved investment offer - Horizontal commitments, June 2004.
54] 'Performance Requirements: P: reserves the right to maintain or adopt any measure related to performance requirements in regulations and/or programmes for domestic producers of capital and information technology goods', in: MERCOSUR-improved investment offer - Horizontal commitments, June 2004, p.1.
55] '[P]rogrammes for domestic producers of any goods', MERCOSUR-improved investment offer - Horizontal commitments, June 2004.
56] 'Brazil reserves the right to maintain or adopt any measure pertaining to subsidies, incentives, grants, or differentiated financial terms, including subsidized loans, guarantees and insurance by government institutions', in: MERCOSUR-improved investment offer - Horizontal commitments, June 2004.
57] '[R]eserves the right to adopt or maintain any measure that, although denied to foreign investors and their investments, is aimed at developing less privileged regions or at reducing regional inequalities', MERCOSUR improved investment offer - Horizontal commitments, June 2004.
58] Brazil 'reserves the right to adopt or maintain any measure aimed at according favored treatment to small enterprises incorporated under Brazilian laws that have their headquarters and management in Brazil', MERCOSUR-improved investment offer - Horizontal commitments, June 2004.
59] 'Reserves the right to maintain or adopt any measure related to performance requirements in regulations and/or programmes for domestic producers of capital and information technology goods', MERCOSUR- improved investment offer - sector-specific commitments, June 2004.
60] See: Valor Económico, 30 August 2005.
61] XIII BNC/MS-EU/TG-2/33/06.05.04 EU-MERCOSUL 13th round of negotiations, 3-7 May 2004, Investment/establishment chapter (side-by-side text).
62] XIII BNC/MS-EU/TG-2/33/06.05.04 EU-MERCOSUL 13th round of negotiations, 3-7 May 2004, Investment/establishment chapter (side-by-side text)., p.1.
63] XIII BNC/MS-EU/TG-2/32/07.05.04 EU-MERCOSUL NEGOTIATIONS, TG 2 - Services consolidated text, p.1.
64] XIII BNC/MS-EU/TG-2/32/07.05.04 EU-MERCOSUL NEGOTIATIONS, TG 2 - Services consolidated text, p.1.
65] All offers, including 'public procurement', 'services' and 'goods' (with the comprehensive lists of goods) are on the public website of the Brazilian Foreign Ministry, Itamaraty): Mercosur-European Union - Mercosur's Completed Offer on Investment, 24 September 2004, pp.13.
66] Mercosur-European Union, Mercosur's Completed Offer on Investment, 24 September 2004, see: Section 1, General Conditions.
67] Argentina, for instance, reserved the right 'to maintain or adopt any measure related to performance requirements in regulations and/or programmes for domestic producers of capital and information technology goods', and 'to maintain or adopt any measure related to incentives in regulations and/or programmes for domestic producers of capital and information technology goods' in the sector 'Manufacturing', in: Mercosur- European Union, Mercosur's Completed Offer on Investment, 24 September 2004, p.13.
68] Mercosur-European Union - Mercosur's Completed Offer on Investment, 24 September 2004.
69] '”?reas como investimentos e compras governamentais (as chamadas concorrências públicas) já estariam com as discussões bastante avançadas', BBC Brasil: see <http://www.bbc.co.uk/portuguese/reporterbbc/story/2005/09/050902_cimentifn.shtml>.
70] BRIDGES, Weekly Trade News Digest, Vol. 9, Number 29, 7 September 2005.
71] This was matched by a statement made by Karl Falkenbergs, deputy director-general in the Directorate- General for Trade of the EU Commission, who wants to withdraw the development country status from Brazil (Valor Econômico, 28 September 2005).