TRADE-LATAM: Proposed Common Farm Policy Gains Strength in Mercosur

By Mario Osava Reprint | | Print |

Mario Osava

FLORIANOPOLIS, Brazil, Dec 14 2000 (IPS) - The Southern Common Market (Mercosur) remains on the offensive in the international agricultural market, and a proposal for a common farm policy is gaining strength among the four member countries, meeting Thursday and Friday in Brazil at their bi-annual summit.

A joint “harvest and crop administration plan” for the four full members of Mercosur – Argentina, Brazil, Paraguay and Uruguay – is indispensable and urgently needed, said Brazilian Deputy Julio Redecker, president of the Joint Parliamentary Commission.

The Parliamentary Commission will present its proposals to the presidents and the ministers of the economy and foreign relations at the 19th meeting of the Common Market Council Friday in this southern Brazilian resort city.

Agreement must be reached on targets and rules for crop production, storage, distribution and marketing, said Redecker, who added that coordination would boost productivity and the ability to penetrate the global market.

That is especially pressing now with respect to rice, he added. Farmers in southern Brazil are trying to block rice imports from Argentina and Uruguay, due to the plunge in prices caused by surpluses in the region.

Agriculture also provides the Mercosur with its strongest arguments in the international trade talks, such as the fight against the farm subsidies and protectionism of the industrialised North, which imposes its own conditions on global trade and thus stands in the way of efforts by developing countries with competitive farming sectors to reduce poverty.

That distortion of trade undermines the legitimacy of the demands set forth by the United States, Japan and the European Union for poor countries to set in place better labour and environmental standards as a requisite for trade deals, said Redecker.

The talks on the Free Trade Area of the Americas (FTAA) are not moving as fast as planned because the United States has failed to show a willingness to open up its agricultural market and eliminate barriers against agro-industrial products from the Mercosur, according to Brazilian diplomats.

So far in the talks on the creation of the FTAA, Washington “has blocked negotiations on agriculture” by arguing that the region can go no further than the World Trade Organisation (WTO) has gone regarding the question of the liberalisation of trade in agriculture, said José Alfredo da Graça Lima, the head of integration matters in Brazil’s Foreign Ministry.

But the same argument is not invoked in the case of intellectual property, services and investment – the areas of greatest interest to the United States, complained Graça Lima.

Washington manipulates the facts when it claims Brazil is holding up the FTAA talks, said José Botafogo Gonçalves, Brazil’s special ambassador to Mercosur, who underlined that 80 percent of the proposals approved in the FTAA talks had been introduced by the Mercosur.

Moreover, the U.S. Congress has refused to grant the administration fast-track authority for negotiating trade agreements. In the past eight years, Washington has only signed two trade accords, with China and Jordan, stressed Graça Lima, responding to claims that Brazil is the biggest hurdle standing in the way of hemispheric integration.

But in fact Brazil is not in a position to accept an acceleration of talks on the FTAA, as the United States would like, as well as several Latin American countries, including Argentina and Uruguay – two of its Mercosur partners – and Chile, which has associate status in South America’s leading trade bloc.

The FTAA could actually deal a harsh blow to Brazilian industry, business leaders and government officials admit.

Without tax reforms and other measures aimed at reducing production costs, the opening of Brazil’s market to North America would make the industrial sector “disappear,” said the president of the Federation of Industries of Sao Paulo, Horacio Piva.

Piva and other business leaders point to obstacles like high interest rates, high costs in the ports, and a tax system that drives up costs. Reforms of the tax system have been under discussion in parliament for several years, with no outlook for progress in the short-term.

Without tax reforms, Brazil will not be able to join the FTAA, stated the executive secretary of the inter-ministerial commission on foreign trade, Roberto Giannetti da Fonseca, a prominent exporter.

However, Graça Lima believes such problems will not stand in the way of an agreement, because the FTAA talks are to run up to 2005 – unless attempts to move the deadline forward prosper – after which the lifting of tariffs would take place gradually over a period of 10 to 15 years, thus giving Brazil time to adapt to the new conditions.

To attain free and fair access to the large agricultural markets of the North, “we must negotiate and negotiate,” said the diplomat.

Brazil does not need to use its industry as a bargaining chip, but its large potential market of consumers instead, which has room for expansion not only of domestic production but of imports as well.

Given its size – the largest country in Latin America – and population – 168 million – Brazil does not depend on exports for growth, at least not to the extent of Canada, Chile, Singapore or Mexico, for example, said Graça Lima.

But it does need to import certain goods, which in turn implies the need to export, in order to avoid imbalance in its external accounts. And it is on that basis that it is orienting its negotiations, he added.