AMERICAS SUMMIT: Mercosur Leaves Internal Differences Aside

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Apr 13 1998 (IPS) - The Mercosur countries seem to have understood, just before the Americas Summit in Santiago, that even large internal differences can be left aside when the time comes to negotiate continental free trade with the United States.

Officials and entrepreneurs of the Southern Cone Common Market (Mercosur) agree the only guarantee of bloc identity lies in the group not dissolving like sugar into the Free Trade Area of the Americas (FTAA) cup of tea, but negotiating as a common, solid front with the same interests.

And this must be the case irrespective of the internal differences amongst the members, they added.

The Mercosur nations had trade worth five billion dollars in 1991, and today deal with more than 15 billion.

But far from being a model which merely diverts trade, as US officials complained, its foreign sales have increased and free trade agreements with other regions have prospered.

One signal which shows the Mercosur is standing strong and advancing on integration with other blocs will be seen two days before the summit opens in Santiago, when two trade agreements will be signed between this bloc the Andean Community and the Central American Common Market in Buenos Aires.

The vanguard of the resistence in the Mercosur trench was Brazil, the country most reluctant to negotiate the accelerated creation of a hemisphere market -of nearly 800 million people and a Gross Domestic Product of more than 8 billion dollars- with the United States.

The other members of the bloc followed the main partner in a strategy which passed the first hurdle in October, during President Bill Clinton’s tour of Venezuela, Brazil and Argentina, and which showed itself successful in the meeting of FTAA assistant trade ministers in San Jose in March.

There, all the American nations, except for the United States and Canada agreed no negotiations would be closed until everything is decided, an aim that frustrated US expectations of advancing through partial agreements in sectors they consider strategic.

The US trade representative, Charlene Barshefsky, had warned when she took office that the Mercosur was noxious to the private interests of her country and that the government and Congress had slept while it became more consolidated.

Barshefsky was the one who fought hardest in Costa Rica for the approval of partial agreements in key areas for her country like communications, computing, electronic trade, or services. But the reponse was, invariably, that no negotiation will be closed until everything is negotiated.

Thus, the Latin Americans assured they would retain negotiating power on issues of interest to them, like agricultural subsidies and the tariff blocks imposed on regional products imposed by the United States.

The creation of an agricultural commission which will be presided over by Argentina and where the elimination of agricultural subsidies and health requisites will be negotiated was considered one of the most important achievements of San Jose by officials in Buenos Aires.

As was proposed by Brazil, all the agreements on the removal of tariffs negotiated in the FTAA will come into action at the same time, in 2005, and not before, by way of conserving the capacity of not retreating in areas of interest to the United States without first ensuring Latin American access to this market.

Some officials who participated in the meeting in the Costa Rican capital, which determined the structure and organisation of the negotiations, its objectives and principles, fear some last minute betrayal by Argentina.

In Costa Rica, Argentina took over the FTAA vice presidency until 1999, but, at least in the documents, the post is held by the country itself, and not the bloc. Argentina, aligned with the United States on the international relations front, is more keen on frontier-free trade than Brazil, and more protective of its industry.

In any case, the path was set for the FTAA negotiations to be formally launched on Saturday 18 when the summit starts in Santiago, although the real launch will occur be with less pomp, in Buenos Aires at the end of June, when the Trade ministers meet again.

For now, the Argentine and Brazilian representatives have set aside differences which have emerged in recent months on some irritating Brazilian measures its trade partner considered badly disguised bars on imports – even those from within Mercosur.

Here, the entrepreneurs appear to be aligned with their governments. In the Business Forum held in Costa Rica alongside the meeting of ministers, the Argentine Industrial Union and the National Confederation of Industries of Brazil led the proposal of not closing any individual negotiation until everything has been negotiated.

The entrepreneurs of the rest of Latin America formed the support base for this proposal which competed with the initiative of gradual and fast negotiations which taken to the same forum by the US and Canadian business sectors.

In fact, neither entrepreneurs nor official negotiators left any weak points where the US negotiation proposal could prosper enough to dominate the rhythm of negotiations.

In a similar tone to the official proposal, impregnated by individual interests, the US entrepreneurs would have preferred the trade restrictions to have started to fall long before 2005, but they could not overcome the Latin American resistence led by the Mercosur entrepreneurs.