TRADE: Peru Seeks Ties with Mercosur, Brazil’s Eyes on Pacific

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Apr 14 2003 (IPS) - For Brazil, Peru presents the shortest route to the full integration of South America and to the markets of Asia, through the Andean nation’s Pacific ocean ports.

The free trade agreement that Peru plans to sign in June with the Southern Common Market (Mercosur) – Argentina, Brazil, Paraguay and Uruguay – could unblock the negotiations between that free trade bloc and the Andean Community – Bolivia, Colombia, Ecuador, Peru and Venezuela.

The agreement will entail the phasing out of tariffs on 85 percent of the products traded between the Mercosur and Peru, over the space of 10 years, with longer timeframes for the remaining 15 percent. Farm commodities are the most delicate products.

A free trade deal with the Mercosur will enable Peru to play the role that Venezuela had been hoping to exercise, as a pivot of integration between South America’s two free trade blocs.

Peruvian President Alejandro Toledo and his Brazilian counterpart Luiz Inácio Lula da Silva – known as Lula – discussed a new ”strategic alliance” during the Peruvian leader’s visit to Brasilia last Friday.

Brazil has long held a vision of a South America capable of taking a strong united stance in international negotiations, such as the current talks on the creation of the Free Trade Area of the Americas (FTAA), in which the United States has been the driving force.

Venezuela’s political crisis has stood in the way of President Hugo Chávez’s goal of forging an alliance with the Southern Cone nations.

Nor has Bolivia achieved its aim of becoming a bridge between the two South American blocs, due to its economic and political limitations, despite its position as a full member of the Andean Community and an associate member of the Mercosur.

Peru’s key role in South American integration ”becomes obvious from just a simple glance at the map,” Enrique Amayo, a Peruvian researcher and professor at Sao Paulo’s State University who has lived for years in Brazil, told IPS.

Besides offering easier access to Asian markets through its Pacific ocean ports, Peru shares the Amazon jungle and its rivers with its neighbours, and is currently ”the most stable country in the Andean Community,” as well as the seat of the bloc’s institutions, Amayo pointed out.

But while the Peruvian economy is growing faster than those of its neighbours, that is only relative, because ”its starting- point was so low” after a 25 percent contraction of Gross Domestic Product (GDP) in the past decades, he noted.

Toledo, Lula and eight cabinet ministers from each country discussed aspects of physical integration and bilateral and subcontinental trade last Friday, like the creation of new flight routes between 15 Peruvian and Brazilian cities, and of roads linking the western portion of Brazil with Peruvian ports.

One concrete result of the meeting was an agreement for the construction of a bridge across the Acre river, which forms part of the border between the two countries. The bridge, to be built in 2004, is to link the cities of Assis in Brazil and Iñaparí in Peru, thus linking the economies of the neighbouring border regions.

Peru’s significance for Brazil as a route to the Pacific and as an Amazon jungle partner was underlined a century ago by writer Euclides da Cunha, author of ”Os Sertoes”, a report on a military massacre of a community that had staged a rebellion in a remote area of Brazil, which served as inspiration for the novel ”The War of the End of the World” by renowned Peruvian writer Mario Vargas Llosa, Amayo pointed out.

He added that although the evidence of Peru’s importance for Brazil has mounted over the years, that did not keep former Brazilian president Fernando Henrique Cardoso (1995-2002) from committing the ”error” of giving priority to Chile – a country that negotiated a trade deal with the United States that ”weakens the Mercosur and Brazil.”

But the new overtures towards Peru reflect a ”positive change” in Brazil’s foreign policy under the administration of Lula, which has stepped up efforts towards strengthening South American integration and unity, said the analyst, who highlighted several factors that favour stronger ties between the two countries.

For example, Brazilian products can be shipped up the Amazon jungle rivers that flow from Peru to Brazil, to the South American ports that are closest to Japan and other attractive Asian markets.

The two countries also share a nearly 3,000-km common border.

Amayo said that Peru and Brazil, along with Colombia, are the countries with the greatest biodiversity in the world, and should join together in the defence of their natural wealth in the face of the ”aggressive greed” demonstrated by the United States and other powers, which, he added, has became even more evident in the war on Iraq.

Bilateral trade between Brazil and Peru, ”although still small, has great potential for growth,” and is another important factor, he observed.

Last year, Brazil exported 436 million dollars worth of goods to Peru and imported 217 million. That imbalance of trade is one of the aspects of concern to Peru, which is eager to sell more foodstuffs and other items of basic consumption to Brazil.

While integration with Peru and other neighbours is important for improving Brazil’s bargaining position in the FTAA negotiations, it is also important to boosting intra-regional trade, said Foreign Minister Celso Amorim.

Since taking office on Jan. 1, Lula has focused on engaging in dialogue with his South American counterparts. So far he has been visited in Brasilia by Colombian President Alvaro Uribe, Ecuador’s Lucio Gutiérrez, Venezuela’s Hugo Chávez, and now Toledo.

Lula expects Chávez once again on Apr. 25, and three days later he will receive Bolivian President Gonzalo Sánchez de Lozada. Uruguayan President Jorge Batlle is scheduled to visit on May 12.