TRADE-LATAM: Fox’s Overture Catches Brazil Off Guard

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Aug 10 2000 (IPS) - Mexican president-elect Vicente Fox’s aspirations for closer Latin America trade ties, already set in motion by his tour of the Southern Cone, surprised Brazil’s diplomatic officials, who have been concentrating on an exclusively South American integration process.

Fox, with his vigorous “Latin American-centred” discourse, is visiting Brazil Wednesday and Thursday, just as the Fernando Henrique Cardoso administration is preparing for the meeting of South American presidents scheduled for Aug 31 and Sept 1 in Brasilia.

This summit, initiated by Cardoso, is part of the Brazilian strategy to unite the southern continent to improve its footing in trade negotiations with the world economic powers, primarily with the United States and the European Union.

Brazil is thus attempting to close the second “concentric circle” of its gradual international integration plans. The first circle was the Southern Common Market (Mercosur), consisting of Argentina, Brazil, Paraguay and Uruguay, and soon likely to include Chile.

But the exclusion of Mexico by limiting the summit to South American countries only has already caused some diplomatic discomfort, requiring Cardoso to provide explanations to Mexico’s current president, Ernesto Zedillo. Now it rings even more discriminatory, given the foreign policy Fox has announced.

Central America and the Caribbean are regions under the economic influence of the United States, as is Mexico, which is a member of the North American Free Trade Agreement (NAFTA), point out Brazilian negotiators in justifying the creation of an exclusively South American trade bloc.

By choosing Argentina, Brazil, Chile and Uruguay as the destinations of his first tour as president-elect, Fox is attempting to create ties with Mercosur for an eventual free trade agreement, an alliance for international negotiations and further cultural exchanges, according to his adviser, Jorge Castañeda.

A sociologist considered to be left-leaning, and author of a biography of Ernesto ‘Che’ Guevara, Castañeda was member of a group of Latin American intellectuals who attempted to define an alternative course for the region to that proposed by the Washington Consensus, which promotes free markets, privatisations and deregulation.

Castañeda acknowledged in a recent article published in the ‘Folha de Sao Paulo’ newspaper that there are strong discrepancies between Mexico and Brazil, but that they could be overcome through trade negotiations with Mercosur.

In fact, the two countries have been trying since last year to re-establish an agreement on preferential tariffs that Brazil allowed to expire in 1997 to press Mexico into negotiations with Mercosur.

Bilateral trade has not grown much in the last few years, remaining below 1.7 billion dollars annually, though both countries recognise that it could be much higports only of assembled pieces produced in other countries, Mexico could be favouring exports of third countries when it signs trade accords.

In addition to negotiations with Brazil, which already established an expansion of trade in automobileond largest country in Latin America, with 95 million people.

The primary obstacle for greater trade liberalisation lies in the rules of origin, according to Brazilian negotiators. With its enormous maquiladora industry, which is limited to exports only of assembled pieces produced in other countries, Mexico could be favouring exports of third countries when it signs trade accords.

In addition to negotiations with Brazil, which already established an expansion of trade in automobileTXACK already established an expansion of trade in automo