TRADE: 4,000 EU-Mercosur Business Contacts

By Dario Montero Reprint | | Print |

Dario Montero

MONTEVIDEO, Dec 4 1997 (IPS) - At one of the biggest gatherings ever between entrepreneurs from South America’s Mercosur trade bloc and the European Union (EU), Uruguayan President Julio Sanguinetti warned that Asia’s financial crisis could have effects similar to the 1929 depression.

The 18th EU Partenariat, the first to be held in Latin America, has drawn some 600 business representatives from 13 of the European bloc’s 15 member countries, and close to 250 from Mercosur – Argentina, Brazil, Paraguay and Uruguay – and its associates Bolivia and Chile.

By the end of the three-day gathering, organised by the Uruguayan Chamber of Industries and the Devnet/TIPS Association, which ends Friday, an estimated 4,000 business contacts will have been made.

In his opening speech to the Partenariat, Sanguinetti said the global economy was going through a transition phase “that generates uncertainty,” and in which expansion faced threats from “unexpected phenomena.”

All that is needed is a glance at the crisis shaking stock markets across the world to realise the extent of the frailty of today’s globalised world and that “we are facing tough times ahead.”

But he added that the existence of international lending institutions, the development of central banks and European unity in the face of the financial crisis “are powerful factors of equilibrium that allow us to look at the situation with concern, but without alarm.”

The weakness of the economies, which leaves them open to speculative attacks, leads to the need for stronger interregional and international mechanisms to ward off future crises, said Sanguinetti, who cited the multinational bailout of Mexico during the 1994-95 crisis, which he said demonstrated Latin America’s response capacity.

“A refinancing of 35 billion dollars led by the International Monetary Fund, the United States and the rest of the countries of the Americas allowed us to contain and overcome the crisis in one year,” he added.

The EU Partenariats are an initiative of the European Commission, aimed at stimulating interregional commercial, economic and technological cooperation and joint ventures between small and medium enterprises.

Welcoming the foreign delegations, Sanguinetti said that from “the good deals” that the business representatives make this week will come “the taxes with which the states provide healthcare, education and housing to the needy.”

EU Commissioner Christos Papoutsis underlined the importance of business ties between the two blocs and of the commercial opportunities generated by such gatherings.

He said the “new Europe” was still in the process of being built and success in the future lay in looking outwards, and added that the possibilities of mutually beneficial associations between Latin America and the EU were “enormous.”

Papoutsis also stressed the key role played by small and medium enterprises in the relations between the two blocs, and as generators of jobs at a time of high unemployment on both sides of the ocean. While large firms have become less and less successful in generating new employment opportunities, small and medium-sized concerns are called on to cover that deficit, especially businesses involved in tourism, he added.

In addition, the EU official pointed out that business gatherings like this week’s Partenariat in Montevideo give rise to cooperation accords that lead to trade agreements and joint ventures, and lay the foundations for future cooperation.

“For that reason we will repeat the experience in other Mercosur countries,” he said, adding that the European Commission was planning three more EU-Mercosur Partenariats in Latin America before the turn-of-the-century.

Mercosur is one of the world’s largest trade blocs, with a combined total of close to 200 million inhabitants. Montevideo is the bloc’s administrative capital.

Sanguinetti, meanwhile, highlighted the deep roots linking Europe with Latin America, which he said facilitated closer links not only in trade but in social and cultural aspects as well.

A major step in that integration process will be taken at an early 1999 meeting in Rio de Janeiro, where the heads of state and government of 21 European and South American nations are to launch talks towards a free trade area.