Economy & Trade, Headlines, Latin America & the Caribbean

TRADE-LATAM: Mercosur Discusses Possible Expansion

Marcela Valente

PUERTO IGUAZU, Argentina, Jul 7 2004 (IPS) - Argentine Foreign Minister Rafael Bielsa proposed Wednesday, on the eve of the summit of South America’s Mercosur trade bloc, the incorporation of Mexico and Venezuela as ”observer members”.

That mechanism, which exists in the Mercosur (Southern Common Market) statutes but has never been used, sets more limited requisites than those demanded of associate members, and could quickly be offered to Mexico and Venezuela ”to start the integration process,” said the minister.

Both of those countries have expressed an interest in joining the bloc, which according to Bielsa is becoming ”a trademark” presence in international forums and trade negotiations, where it presses for the elimination of the protectionist practices of industrialised countries.

At a news briefing with accredited reporters in this city in the province of Misiones, 1,600 km northeast of Buenos Aires, he noted that several countries have shown great interest in participating in Mercosur (Southern Common Market), which is made up of full members Argentina, Brazil, Paraguay and Uruguay and associate members Bolivia, Chile and Peru.

Mercosur is the world’s third largest trade bloc after the European Union (EU) and the North American Free Trade Agreement (NAFTA), representing a market of 215 million people with a combined Gross Domestic Product (GDP) of 1.44 trillion dollars.

Bielsa’s proposal opened Wednesday’s meeting of foreign and economy ministers, who make up the bloc’s Common Market Council, prior to Thursday’s bi-annual summit of presidents.

The Common Market Council discussed the progress made over the past six months in negotiations for the liberalisation of trade with the rest of Latin America, the EU, and countries in Asia and Africa, while debating trade issues as well as institutional Mercosur questions.

The meeting’s host, Bielsa, also brought up the challenge of ”perfecting” democracy in the region by building societies that are ”more equitable” and respectful of human rights, to ”reduce inequality and the shortage of decent employment.”

The first part of the meeting involved the ministers of the bloc’s four full members, who were to be joined later by the ministers of Bolivia, Chile and Peru. The president of the bloc’s Commission of Permanent Representatives, former Argentine president Eduardo Duhalde, also took part.

In a break in the meeting, he told the press that the invitation for other countries in the region to join the bloc arose from an interest in ”building a Latin American community of nations,” which is ”still in the embronyic stage” but ”is a dream that could become reality.”

”The world is moving from the nation-state to units of integration, and in the Americas we have NAFTA, the Central American integration accord, the Andean Community and Mercosur,” Duhalde added.

In time, he said, these blocs will pull together in a continent-wide integration initiative, but for the time being the aim is Latin American – and more specifically South American – unity.

Presidents Néstor Kirchner of Argentina, Luiz Inacio Lula da Silva of Brazil, Nicanor Duarte of Paraguay and Jorge Batlle of Uruguay will meet in the XXVI Mercosur summit Thursday, and will be joined later by presidents Carlos Mesa of Bolivia and Ricardo Lagos of Chile, as well as a delegate of the Peruvian government of Alejandro Toledo, who is on an official visit to Spain.

Also invited to the summit as guests are presidents Vicente Fox of Mexico and Hugo Chavez of Venezuela.

In a conversation with IPS, the coordinator of the Mercosur Political Consultation and Coordination Forum, Dario Alessandro, expressed the Argentine delegation’s ”surprise” at the strong interest shown by Mexico in participating in the bloc, as reflected by the large Mexican delegation and ample presence of representatives of media outlets from that country.

”Mercosur has become a very strong political pole with which countries that did not initially participate now want to be associated in some way,” said the Argentine official.

Alessandro pointed out that among the indispensable requisites for becoming an associate member is the signing of a free trade accord with the bloc and the Mercosur democracy clause, which stipulates that any country that experiences a breakdown of the ruling order is automatically expelled.

But, he added, that does not mean that ”the doors would be closed” to any country. ”It is possible to create a new mechanism by which they can be incorporated into the process,” he said.

For his part, Bielsa welcomed ”the interest of other countries in joining Mercosur.”

But Fox has stated that Mexico has no plans to sign a free trade treaty with the bloc as a whole. Of the Mercosur members, Mexico has only signed a free trade agreement with Uruguay.

As an ”alternative” and ”an exercise of reflection”, Bielsa proposed a search for ”broader criteria” for incorporating other countries into the Southern Cone regional integration process, such as employing the mechanism of ”observer member”.

At the start of the Common Market Council meeting Wednesday, the ministers discussed the issues that are standing in the way of the signing of a free trade deal with the EU.

Although Foreign Ministry officials said the signing of the agreement in October as scheduled depends on whether the European bloc will increase its openness to Mercosur products, Bielsa said it would be completed ”before the end of the year.”

With respect to a proposed free trade deal between Mercosur and the Andean Community trade bloc, he said that until an agreement is reached, ”we will continue developing a common voice in international forums and trade talks, to improve our bargaining position, especially against the protectionist practices of developed countries.”

The ministers also discussed the possibility of different kinds of trade agreements with China, Egypt, India, Japan, Morocco, Singapore, South Korea and the Southern African Customs Union.

The Foreign Ministry’s undersecretary of economic integration and Mercosur, Eduardo Sigal, commented to IPS that the Mercosur countries have also nearly reached a consensus on eliminating the double tariff on non-Mercosur merchandise in transit through the bloc, and on the internalisation of Mercosur rules by each member nation.

These questions and others were dealt with in technical meetings on Monday and Tuesday, in an attempt to make progress towards agreements before the summit, in which the rotating presidency will pass from Argentina to Brazil.

Although it is not on the formal agenda, the ministers will attempt to overcome the conflict triggered Monday by Argentina’s decision to restrict electronics imports from Brazil, which were hurting local production and jobs. Brazilian officials refrained from commenting on the issue at the meeting. But Brazilian business leaders complained loudly to the Kirchner administration over what they called an ”arbitrary measure” that runs counter to Mercosur accords.

Argentine deputy Foreign Minister Martin Redrado justified the measure by the need to strike a better balance in trade between the two biggest Mercosur partners, and said attempts were made for nearly a year to avert the need for the restrictions, but no agreement was reached.