INTEGRATION: Expansion of MERCOSUR Changes Negotiations for FTAA

By Humberto Márquez Reprint | | Print |

Humberto Marquez

CARACAS, Jul 12 1996 (IPS) - The earlier than expected expansion of the Southern Common Market (MERCOSUR) will modify the negotiations of the Free Trade Area of the Americas (FTAA), due to be finalised by the year 2005, the head of the Latin American Economic System (LAES) said in Venezuela.

Carlos Moneta, the permanent secretary of LAES, pointed out that a new possible route towards the FTAA is emerging: negotiations between the MERCOSUR — Argentina, Brazil, Paraguay and Uruguay — and the North American Free Trade Agreement (NAFTA) — Canada, Mexico and the United States.

Three possibilities for the creation of the FTAA had been discussed up to now: a gradual phasing together of subregional integration accords, a country-by-country expansion of NAFTA, or an entirely new negotiation process. Governments in the region had so far expressed their preference for the first option.

Moneta, who told reporters during a seminar on integration at LAES headquarters in Caracas on Thursday that his forecasts were on a theoretical plane, said the speed at which the MERCOSUR is expanding is surprising.

“Elements that up to a short while ago seemed vague or out of reach” have suddenly become possible, said Moneta, referring to the signing in June of an accord for the liberalisation of trade between the MERCOSUR and Chile, and an agreement to do the sazme with Bolivia in 1997.

The incorporation of Venezuela and Colombia, “which we thought would occur after the year 2000, will perhaps take place earlier than that.” And “important steps in that direction are also being taken” in Central America, while the Caribbean region “is seeking closer ties with South America.”

The process “is not taking place in a vacuum but parallel to others, like the trade accord between the European Union and the MERCOSUR and Chile, and a similar one being worked out with Mexico.”

On the other side of the world, “APEC (Asian-Pacific Economic Cooperation forum) is advancing, while ASEAN (Association of Southeast Asian Nations) has moved its goal for integration forward from 2008 to 2003, and wants to have the main part of the negotiations ready by 2000,” Moneta pointed out.

Bridges are also being extended from South America to Australia and New Zealand, as well as towards the nascent southern cone of Africa, led by South Africa. Moneta recalled the historical ties between countries such as Brazil and several nations in the south of Africa.

“A multiplicity of processes are mutually affecting each other,” he said, while adding that those advances are accompanied by a range of still unanswered questions.

The year 2005 as the deadline for laying the groundwork for the FTAA was proposed during the 1994 Miami summit of 34 presidents from throughout the hemisphere (with the exception of Cuba). The leaders plan to review progress towards that ambitious goal during another meeting set for late this year in Bolivia.

Moneta said the first question is whether the FTAA will be negotiated within the limits of the World Trade Organisation or is to go even farther, as NAFTA did, with norms on investment and environmental and labour stipulations.

The second is “how to deal with the enormous differences between the commercial integration schemes” in the hemisphere — agreements for a partial lifting of tariffs alongside pacts for a complete slashing of duties, special conditions set on the opening of markets (NAFTA) and incomplete customs unions with liberalised markets (MERCOSUR).

Another question is how the countries and blocs will join together in the FTAA, as coexistence between the new pact and the existing accords with their institutions, norms, etc. will be difficult. In that respect, Moneta pointed to the possibility of “the beginning of negotiations between the two poles,” NAFTA and MERCOSUR.

“A two-speed European-style solution” could be an answer, said Moneta, with “those States with greater capacity to absorb the costs making progress with more accords, while others join with a the commitment to reaching a unified market in the long- term.”