MERCOSUR: Bloc Resists Push to Speed up Negotiations toward FTAA

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, May 12 1997 (IPS) - When it comes to facing up to the flood of U.S. goods expected to accompany the birth of the Free Trade Area of the Americas (FTAA), the governments and business communities of the members of Mercosur are united more by fear than love, in the words of a late great Argentine writer.

Just as reknowned writer Jorge Luis Borges described his relationship with Buenos Aires, Argentina, Brazil, Paraguay and Uruguay do not seem united by love, but rather by fear in the face of U.S. pressure to speed up discussions on the lifting of tariffs throughout the continent.

Accustomed to intra-bloc competition, domestic trade spats and threats of rupture, the governments of the Southern Common Market (Mercosur) have decided to attend this week’s meeting of trade ministers of the Americas in Belo Horizonte, Brazil with a common position.

The business communities also left aside their differences and met Monday in Sao Paulo, Brazil to prepare a united stance that can serve as a shield against the avalanche of U.S. products that will undoubtedly fall on local markets when the FTAA is created.

“Our initiative tallies 95 percent with that of Brazil’s industrialists,” said the vice-president of the Argentine Industrial Union, Alberto Alvarez Gaiani, before flying to Sao Paulo Monday.

Gaiani downplayed the tension created when Brazil unilaterally eliminated financing for imports – including purchases from the Mercosur – in a measure interpreted by its three partners as a restriction on trade.

Since the goal of the FTAA was launched by the United States in 1995, at the Miami Summit of the Americas, 34 countries have agreed to work toward a free trade area encompassing the entire continent by the year 2005. But differences have arisen with respect to the rate at which the FTAA is to be negotiated.

The members of Mercosur – Latin America’s leading economic bloc – want to move forward slowly and cautiously, leaving the question of tariff reduction to the very last.

But the United States would like to begin discussing the elimination of tariffs next year, at the following ministerial- level meeting, in Costa Rica.

Argentine economist Enrique Carrier warned that the United States was not only keen on ensuring a reserve market in Latin America, but would also like to curb the emergence of blocs like Mercosur, which divert trade currents, benefiting members at the expense of non-members.

Although there is agreement on the overall goal of a continent- wide free trade area, Argentina and Brazil have recently blocked proposals in FTAA working groups that aimed to speed things up through the compilation and collation of trade resolutions from the countries involved.

The differences between the United States and Mercosur have persisted at recent meetings of functionaries. One U.S. negotiator, Peter Algeier, warned that the disagreements could hinder the signing of a joint declaration in Belo Horizonte.

The negotiators have drafted a document to be signed at the Tuesday-Thursday meeting, but it lacks a precise timetable for the creation of the FTAA, simply stating that the negotiating process will be launched at the 1998 Summit of the Americas in Santiago de Chile.

Mercosur members are interested in “preserving the identity” of the bloc within the FTAA, said Jorge Campbell, the Argentine Foreign Ministry’s secretary of International Economic Relations.

“Mercosur is an active promoter of the FTAA,” he underlined. “But we propose certain lines along which to work – like maintaining the essence of Mercosur, deepening the subregional integration process and negotiating as a bloc.”