TRADE-MERCOSUR: Bloc Resists ‘Dissolving’ into FTAA

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Oct 13 1997 (IPS) - In spite of U.S. praise for the expansion of Mercosur, few analysts doubt that President Bill Clinton’s real wish is to see the subregional bloc dissolved into a broader Free Trade Area of the Americas (FTAA).

The third stop on his visit this week to South America, Clinton reaches Argentina Wednesday for the first time ever, after a 24- hour stopover in Venezuela which ended Monday and a visit to Brazil.

Clinton aims to promote free trade and economic integration with one of the world’s fastest growing regions, second only to southeast Asia.

The total annual trade turnover of the members of Mercosur – Southern Cone Common Market, comprised of Argentina, Brazil, Paraguay and Uruguay – amounts to more than 16 billion dollars today, compared to 5.1 billion dollars in 1991.

Far from representing a case of a diversion of trade, the bloc saw a rise in its exports, and it is negotiating a free trade accord with the European Union and forging increasingly closer ties with southeast Asia.

Clinton’s visit is marked by a gap between the objectives set forth by his administration and the opinion of political analysts, business representatives and diplomats in Brazil and Argentina, who are sceptical of the United States’ friendliness towards Mercosur.

The bloc – with which Chile obtained associate status in 1996 – is a positive factor which “we want to support,” said James Debbins, the U.S. administration’s official in charge of Inter- American Affairs.

But a following remark gave rise to doubts: “Mercosur is negotiating with Canada, Europe and the rest of South America, and the United States does not want to be left out.”

If it had not been for his knee surgery, Clinton would have arrived here in May, shortly after French President Jacques Chirac’s visit.

Chirac declared that “Latin America’s future does not lie on a North-South axis, but in Europe,” and “Latin America’s vocation is to be present throughout the world, and its essential interests in trade, investment and aid do not lie in the United States but in Europe.

“This can be seen clearly in Mercosur, whose principal economic partner is the European Union,” he added.

To counteract that influence and recover its commercial leadership in its “backyard” – as Latin America was seen for years by Washington – Clinton visited Mexico, Central America and the Caribbean earlier this year in addition to his present South American tour. This year’s visits stand in contrast to his first presidential term, during which he failed to set foot south of the Rio Grande.

His next trip to the region will be to the second Summit of the Americas, scheduled for April 1998 in Santiago, Chile.

“We have to work with the members of Mercosur in such a way that the South American processes of integration converge with the North American one,” said Debbins, recommending negotiations of some issues, such as tariffs, “as a bloc,” and others like the question of services on a country by country basis.

Analysts have pointed to a U.S. strategy of ‘atomising’ the bloc with respect to the negotiations on FTAA. They cite the “gifts” offered by the United States to each country, which have given rise to tension and competition within the bloc.

On his visit to Argentina, Clinton will invite Argentina to become a non-NATO (North Atlantic Treaty Organisation) ally – an offer that has not been looked on very kindly by Chile, which is trying to leave behind a history of military tension and competition with Argentina. Meanwhile, the United States has offered F-16 fighter planes to Chile.

Brazil is seeking a permanent seat on the U.N. Security Council, in representation of Latin America, a bid which has not been particularly welcomed by Argentina and other countries in the region.

Former Argentine foreign minister Dante Caputo cited Samuel Huntington, author of “The Clash of Civilisations”, arguing that “the basic rules of diplomacy and politics prescribe that the United States must try to pit us against each other.

“If Mercosur is weakened, our region will lose its main national instrument for surviving in the so-called globalised world,” said Caputo, adding that the bloc is Argentina’s channel for insertion in the world.

“If we lose it, we disappear as a nation,” he underlined.

The difficulties faced by negotiators with respect to the creation of an FTAA by the year 2005 have become increasingly clear in meetings with Mercosur representatives.

Brazil wants a gradual negotiation process without deadlines, while the United States wants to begin to discuss the reduction of tariffs by early next year.

Last week, foreign ministry officials from Argentina and Brazil met to join forces in an “internal front” prior to Clinton’s visit, as did the business sectors of the two countries.

“The Mercosur negotiators must maintain Mercosur preference to the utmost, while preserving their customs union,” Brazilian Senator Fernando Bezerra, the head of Brazil’s National Confederation of Industries, told a group of Argentine business representatives in Buenos Aires.

Economist and stock broker Enrique Carrier said the United States aimed to “forge the greatest possible space for placing its products in the rest of the countries of the continent,” while seeking “to curb the proliferation of successful blocs like Mercosur.”

Analysts observing the push and pull between Mercosur and FTAA recall the words of U.S. trade representative Charlene Barshefsky, who said upon assuming her post that Mercosur was harmful to the interests of U.S. business, and that the government had been “sleeping on the job” when it came to that bloc.

Sandy Bergsen, a member of the U.S. National Security Council, said that over the past two years, “we were outside of the game” when it came to trade accords, and “now we see that South America is increasingly looking towards Europe and Asia.”

Bergsen defended Clinton’s initiative to seek “fast-track” negotiating authority for trade issues, meaning Congress would only be able to approve or reject – but not amend – trade deals. If the president’s bid for fast-track authority is successful, the challenge to Mercosur nations of maintaining unity will become that much stronger.