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SOUTH AMERICA: Mercosur Opens Doors to Worrying Fifth Element
By Darío Montero
MONTEVIDEO, Dec 8 (IPS) - Venezuela's admission to South America's Mercosur
trade bloc -
which is not as imminent as was previously announced - is backed by economic
sectors keen on gaining access to oil under preferential terms.
But certain doubts are raised by questions like the harmonisation of
tariffs and Venezuelan President Hugo Chávez's fiery anti-U.S. rhetoric.
Mercosur (Southern Common Market), made up of Argentina, Brazil, Paraguay
and Uruguay, will formally invite Venezuela to become the fifth full member
of the bloc at Friday's summit meeting in Montevideo, the Uruguayan capital,
although lengthy negotiations lie ahead before the agreement is finalised.
Not even Chile, the bloc's oldest associate member - a status it was granted
in 1996, a year before Bolivia became the second associate member - has
attempted to become a full partner, because to do so it would have to bring
its foreign tariffs into line with those of the bloc. (Chile has a foreign
tariff of six percent, compared to the Mercosur common external tariff of 35
percent).
The differences with respect to trade questions remain in place despite the
ideological affinity between the centre-left Chilean government and the
left-leaning administrations currently ruling Argentina, Brazil and Uruguay.
But firebrand Chávez came knocking on the Mercosur's door with a suitcase
full of petrodollars that looked tempting to highly indebted economies, and
a generous offer to finance purchases of increasingly scarce oil and natural
gas, in exchange for abundant agricultural products needed to reach his
dream of food sovereignty (the primacy of people's and community's rights to
food and food production, over trade concerns) for Venezuela.
But the road to full membership in Mercosur is long and complicated. Before
Venezuela becomes the fifth partner, it will have to accept the bloc's
statutes, rules and regulations, fulfill a series of tariff requirements,
and ratify Mercosur agreements - a process that is supposed to take six
months to a year.
Presidents Néstor Kirchner of Argentina, Luiz Inácio Lula da Silva of
Brazil, Nicanor Duarte of Paraguay and Tabaré Vázquez of Uruguay will merely
be extending a "political welcome" to Chávez to join the Mercosur bloc,
which was founded by the Asunción Treaty in 1991.
That will mark the start of a period of the fulfillment of requisites for
Caracas to have a vote in the bloc rather than simply a voice (as an
associate member), Nelson Fernández, assistant director of integration
matters and Mercosur in the Uruguayan Foreign Ministry, told IPS.
He said that although it is possible that the process will take two or three
years, he doubts that it will stretch out as long as some observers expect.
He added, however, that the formal acceptance of Venezuela is an important
step in the integration between that country and Mercosur, which he said
have complementary economies.
The first question to be dealt with at the Friday summit will be the
approval of the document creating the Mercosur Parliament. After that will
come the complex negotiations for Venezuela to sign the Mercosur protocols,
adopt the common external tariff, assume the bloc's agreements with third
party countries, and accept the bloc's negotiations with third parties, like
the ongoing talks with the European Union.
The Treaty of Asunción states that any member of the Latin American
Integration Association (ALADI) can join Mercosur if all four full partners
approve the request. Venezuela formally filed its application in August.
"It is a very atypical admission process in comparison with the experiences
of Latin American integration up to now," said Uruguayan expert in
international relations Romeo Pérez.
That is because the aim is to resolve questions of tariff harmonisation and
trade and economic compatibility in just six months to a year between a new
partner and a bloc that is already nearly 15 years old, he told IPS.
Pérez, a political science professor at the University of the Republic, also
warned that by opening up its market to the Mercosur free trade zone,
Venezuela will be flooded by agribusiness products from Argentina and
Brazil, two of the world's leading exporters of agricultural commodities.
He also underscored the impact that Venezuela's admission will have on "the
nature of Mercosur, which will move in the direction of becoming a political
unit with little economic and commercial discipline."
"It will become an association of those who are opposed to the United
States," especially in trade matters, said Pérez.
He pointed to what has already occurred in the negotiations for the creation
of a Free Trade Area of the Americas (FTAA), particularly at the early
November Summit of the Americas in Argentina, when the four Mercosur members
and Venezuela joined together to oppose the renewal of the stalled FTAA
talks.
But the analyst also noted, with a certain amount of pessimism, that
Venezuela's actual admission "will depend on the results achieved in a long,
arduous negotiation process."
A completely different view is held, although for different reasons, by
Fernández and the director-general of the Andean Community trade bloc,
Héctor Maldonado.
Venezuela's application to join Mercosur is seen by the Andean Community -
made up of Bolivia, Colombia, Ecuador, Peru and Venezuela itself - as "an
extremely positive development for the construction of the South American
Community of Nations," above and beyond the fact that "we still have to
analyse Venezuela's proposal to become a full member," said Maldonado.
The embryonic South American Community was launched at the third South
American Summit in December 2004 in Lima, Peru.
"We are optimistic with respect to this process," because Caracas' intention
of joining Mercosur will help strengthen South American unity, Maldonado
told IPS by telephone from the headquarters of the Andean bloc's General
Secretariat in Lima
Although it is not yet clear exactly what the process of admission of an
Andean Community member into Mercosur will look like, the Andean bloc "has
been extremely flexible" when a member negotiates agreements with third
countries or blocs on its own, he commented.
Maldonado recalled that in its December 2004 summit meeting in Quito, the
Andean Community adopted article 598, which expressly authorises the
partners to engage in free trade negotiations outside of the bloc, as
Colombia, Ecuador and Peru are currently doing with the United States.
Maldonado also confirmed that Venezuela had emphatically assured its
partners that it had no plans to abandon the Andean Community, the oldest
trade bloc in the region (originally known as the Andean Pact).
At any rate, he said, significant trade compatibility problems must be
cleared up first, like the fact that the Andean Community has a four-tier
external tariff structure of five, 10, 15 and 20 percent, while Mercosur has
a 35 percent tariff applicable to imports from outside of the free trade
zone.
This is just one of the problems that must be resolved before Venezuela can
be admitted to Mercosur, he stressed.
Pérez was referring to these and other touchy aspects when expressing his
pessimism with respect to the future of the Mercosur-Venezuela partnership.
"This is a full membership that is based on fuzzy legal foundations," he
said.
"It is not good for the bloc to move away from its current economic and
trade profile," undermining long-term accords, to seek an alliance with
Caracas only in response to immediate needs, "like petrodollars to alleviate
the public debt, in Argentina's case, or in search of energy security, in
the case of Brazil and Uruguay," he said.
Nor is everyone in the private sector eager to see Venezuela join Mercosur.
Agricultural producers in Venezuela, for example, see their powerful
competitors to the south as a serious threat to farmers in Venezuela. The
country's agricultural chambers have already called for compensatory
measures, but analysts assume these would fall far short.
The president of the Venezuelan livestock association, Genaro Méndez,
pointed out that "it costs 18 cents of a dollar to produce a litre of milk
in one of the Mercosur countries compared to 35 cents in Venezuela. At
present we cannot compete."
There are also actors behind the scenes ready to take the stage to throw new
wrenches in the gears, because the proposed integration between Caracas,
Brasilia and Buenos Aires has caused nervousness not only within the region
but outside of it as well.
(END/2005)
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