MERCOSUR: A Springboard to the Global Market

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Dec 17 1994 (IPS) - When the Southern Cone Common Market (MERCOSUR) goes into effect on Jan. 1, 1995, the governments of its four member countries will immediately begin preparing for a new challenge: dealing as a bloc with other regional entities.

As a symbol of the coming era, the four Presidents will meet on Jan. 1 in Brasilia – at Brazilian President-elect Fernando Henrique Cardoso’s inauguration ceremony – to begin to discuss the continental free trade bloc foreseen by the recent Miami Summit of the Americas for the year 2005.

“MERCOSUR member countries (Argentina, Brazil, Paraguay and Uruguay) consider that what will benefit us most is to tend towards a multilateral system of free trade,” Argentine Economic Minister Domingo Cavallo said this week.

“That is why we so energetically negotiated a successful conclusion to the Uruguayan Round of GATT (General Agreement on Trade and Tariffs).

“Argentina is more interested in moving towards the creation of a continental free trade bloc, a free trade area with the European Union and another with Southeast Asia, than in joining the North American Free Trade Agreement,” the minister stressed.

Cavallo’s statements once more demonstrate that Argentina wishes to see the MERCOSUR become a trampoline to the global market, which would mean both an increase in trade and an additional – if not the main – attraction for foreign investors.

But the question posed by analysts is how MERCOSUR members will overcome their differences and reach the necessary uniformity to compete as a bloc with other regions.

In Saturday’s MERCOSUR Summit in Ouro Preto, Brazil, the four Southern Cone partners agreed on their respective lists of products to be excluded from the regional free trade area to go into effect on Jan. 1.

While Brazil will have a list of 29 exceptions, Argentina will continue protecting 221 products, Paraguay 427 and Uruguay 950.

Speaking with IPS, Argentine foreign ministry official Carlos Moneta said, “open regionalism is more a Brazilian idea that Argentina took up as a concession to its MERCOSUR partner and the United States.”

“But for now it is only a political declaration, because only a miracle could bring the MERCOSUR countries to overcome their differences and become part of a continental free trade zone by 2005,” he added.

According to some specialists in world trade, the process of regionalisation such as that posed by Argentina and Brazil should focus on an opening to other regions, rather than be used by national companies as a trench from which to push for stricter protectionist measures.

So argues Colin Bradford, Jr., director of the Development Centre of the Paris-based Organisation of Economic Cooperation and Development (OECD), which encompasses the world’s 25 most industrialised countries.

In his article, “The Rules of the Game: Latin America, Globalisation and Regionalism,” Bradford argues that “regional initiatives should not be undertaken as isolated actions but as part of a general strategy to facilitate the transition to multilateralism, not replace it.”

“This concept of linking regional initiatives with long-term global objectives is a way of reducing the potential negative effects of regional accords.”

The author holds that despite possible setbacks, efforts of Latin American countries to simultaneously move forward on a regional and multilateral level “have better possibilities of leading to liberalisation and increasing wealth than if each country were to sign unilateral accords.”

After the MERCOSUR becomes a reality on Jan. 1, the governments of its four member countries, far from resting on their laurels, will begin to prepare for new and bigger future challenges.