Brazil's chief negotiator, Ambassador Ronaldo Costa Filho, said the European offer to allow 70,000 tonnes of beef and 600,000 tonnes of ethanol to enter the EU with lower tariffs was far from what Mercosur members were expecting and will make the goal of reaching a deal by December more difficult.
The small offer came as a surprise, but did not impede "productive and constructive" talks on other areas, Costa Filho said.
Given the level of commitment by both sides to reaching an overall deal by December, he said he believed it was "technically possible" to resolve the beef and ethanol issues.
Mercosur, which also includes Paraguay and Uruguay, had previously said an offer without beef in particular could not lead to a deal. According to Argentina's powerful farm lobby, the beef quota as proposed is equivalent to just two hamburgers a year per EU resident.
EU nations led by France and Ireland had previously proposed postponing the farm trade offer until rules can be agreed to avoid unfair competition.
"We made it clear to the EU that there has to be a substantial improvement for there to be a deal," Horacio Reyser, secretary for international economic relations at Argentina's foreign ministry, told Reuters. "This does not allow us to advance at the speed we would have hoped."
He said Argentina was also hoping for an improvement in the EU's offer for other agricultural products including poultry, rice and fruit.
The next round of negotiations is scheduled for November 6-10 in Brasilia and diplomats said there might be an additional round if necessary that could be held in Brussels.
"We're hoping for some instrument that allows us to say that the deal will be finalised, although we will certainly need to keep polishing it a little more in 2018," Reyser said.
(Reporting by Lisandra Paraguassu and Anthony Boadle in Brasilia, and Maximiliano Rizzi in Buenos Aires; Editing by Toni Reinhold and Tom Brown)
