INTEGRATION: Strife Between the FTAA and Mercosur Moves up a Gear

By IPS Correspondents Reprint | | Print |

Analysis Carlos Castilho

RIO DE JANEIRO, Feb 14 1997 (IPS) - The Bill Clinton government appears ready to train its guns on the Mercosur, especially against Brazil, in order to recover control on the trade integration process in Latin America.

This is the almost unanimous interpretation of the diplomats in Brasilia, given complaints presented by both Brazil and the United States over the Mercosur.

The root of the problem lies in an ever deeper dispute between the Southern Cone Common Market (Mercosur), made up of Argentina, Brazil, Paraguay and Uruguay, and the Free Trade Area of the Americas (FTAA) initiative launched by the United States in 1994.

Off the record reports tell of increasing North American impatience with the advance of the integration process in the Southern Cone, while the FTAA refuses to take off.

The new US foreign trade secretary, Charlene Barchefsky, referred to the Mercosur as a “small trade unit,” during a debate with the senators in US Congress.

Barchefsky, whom The New York Times described as “spitting fire,” rubbed salt in the wound by adding that the United States is running the risk of leaving a leadership vacuum on the continent, which could leave the way open for secondary actors, like the Mercosur countries, to take the initiative.

The US strategy appears to have chosen Brazil as the main target, for believing that this country is in some way dealing the cards within the Mercosur.

It is no secret that Washington’s main fear is that the subregional bloc will manage to broaden its area of influence over all South America, leaving the FTAA, and especially the United States, in the uncomfortable position of disputing openings with weaker economies.

Economic representatives of the White House have criticised the Brazilian “slowness” in allowing the transnational companies to take control of key sectors like telecommunications, information technology and vehicle manufacture.

The Brazilian authortiies reacted by criticising the protectionist obstacles imposed by the United States on orange juice, steel products and sugar.

According to the Brazilian magazine “Veja,” this is a “shop door discussion,” as North American exports to Brazil have grown 136 percent in the last five years and the automobile and computer industries are controlled by transnational companies like General Motors, Ford, IBM and Compaq.

The US offensive against the Mercosur will become more evident at the end of this month, when Chile’s President Eduardo Frei will visit Clinton. The host will be trying to seduce his guest, to avoid a repeat in Chile of what happened in Argentina a couple of years ago.

Early on in the Mercosur process, the US government was sure that Argentina could abandon the alliance with Brazil, Paraguay and Uruguay at any given moment, in order to join the North American Free Trade Association (NAFTA) with Canada, Mexico and the United States.

Four years later, the Argentine economy is still firmly anchored in the Mercosur.

Chile also had one eye on the NAFTA, but US Congress put obstacles in the way, and the Chileans ended up drawing closer to their Mercosur neighbours. But trade integration is still incipient.

As a result Chile has become the key piece in the political dispute for the integrationist hegemony on the continent. If Clinton can seduce Frei, the Andean nations would not be so interested in the Mercosur, and a radical U-turn could be effected.

Washington appears certain Brazil is the biggest obstacle to its increasing economic power, generating the results of the structural adjustment implemented by President Fernando Cardoso.

Brasilia has ably played the European card to trump the North American pressure, stating that the integrationist march of the Mercosur cannot be stopped in order to give the FTAA time to advance out of the rhetoric.

This is a game which is in the opening stages and there is still a long way to go. The strange factor this time round is that it is the United States which is trying to make up the lost ground.