TRADE-AMERICAS: Mercosur Defends Autonomy Despite Internal Dissent

By Mario Osava Reprint | | Print |

Mario Osava*

RIO DE JANEIRO, Nov 20 2003 (IPS) - A balanced Free Trade Area of the Americas (FTAA) marked by a spirit of reciprocity is what the members of South America’s Mercosur trade bloc are seeking, despite internal dissent.

The trade ministers meeting Thursday and Friday in Miami in the FTAA talks co-chaired by Brazil and the United States are discussing a more flexible new design for the continent-wide free trade area.

In the meantime, massive demonstrations by social activists continue to attempt to derail what they see as an ”imperialist” U.S. initiative.

Fissures began to appear in Mercosur (Southern Common Market) when the government of Uruguay decided to strike out on its own in its bid to gain greater access to markets outside the bloc, while its partners – Argentina, Brazil and Paraguay – are united in a common front in the free trade negotiations.

But the aim of the conservative Uruguayan administration of Jorge Batlle to seek closer, separate ties with Washington is a less serious problem than the disputes of the past between the biggest Mercosur partners, Cristina Pecequilo, an expert in regional integration issues at the Ibero-American University Centre in Sao Paulo, told IPS.

In the past, sectoral disputes and other conflicts between Brazil and Argentina often marred Mercosur unity.

But today, the government of former trade unionist Luiz Inacio Lula da Silva in Brazil and the left-leaning government of Néstor Kirchner in Argentina are taking a united stance in their determination to defend the world’s third-largest trade bloc and its ”decision-making autonomy” – in other words, the possibility of choosing what path they will follow in their search for continued development, said Pecequilo.

The two countries will negotiate the FTAA ”elbow to elbow,” said Argentine Foreign Minister Rafael Bielsa at the 13th Ibero-American Summit last weekend in the central Bolivian city of Santa Cruz.

But even Uruguay is pleased with the proposed new blueprint for the continent-wide free trade area, under which countries could opt out of certain parts of the accord and continue to negotiate others.

This week ”we have moved towards a new approach to the FTAA, and we are heading to Miami unwilling to accept formulas that limit trade,” said Uruguayan Foreign Minister Didier Opertti before travelling to the U.S. state of Florida to take part in the eighth FTAA ministerial conference.

The new plan for the common market being discussed by 34 countries – all of the countries in the Americas with the exception of Cuba – would consist of basic rules while allowing members to negotiate additional bilateral or ”plurilateral” accords, thus making it possible for Batlle to continue seeking a bilateral agreement with Washington without clashing with the rest of the Mercosur nations.

In the 1990s, Mercosur – which was created by the Asuncion Treaty in 1991 and accounts for over 70 percent of South America’s combined Gross Domestic Product (GDP) – absorbed 52 percent of Uruguay’s exports.

But that proportion has now dropped to 25 percent, which is why the country of 3.2 million must seek new markets, said Opertti.

”An FTAA made-to-measure for each economy does not worry us. On the contrary, we would welcome it,” said the minister.

The demand for a reduction of the hefty subsidies that the governments of industrialised nations shell out to their farmers, making it difficult or impossible for poor farmers in the developing world to compete, has not been raised in discussions between Uruguay and the United States, even though the Batlle administration has complained about farm subsidies when it comes to negotiating with the European Union.

Batlle is a personal friend of Florida Governor Jeb Bush (President George W. Bush’s brother), who says he is not ashamed to defend protectionist measures and subsidies that favour the state’s citrus-growers, who compete with producers in Uruguay, Argentina and Brazil.

So far, Uruguay and the United States have merely stated their intention to begin discussing a bilateral free trade deal at some point, although Brazilian delegates to the talks in Miami said Opertti had proposed the start of negotiations, in a letter to U.S. Trade Representative Robert Zoellick.

With regards to Brazil’s interest in talks between Mercosur and the United States, Brazilian Foreign Minister Celso Amorim said in Miami Wednesday that ”we are going to set a date as soon as possible for an accord between Mercosur and the United States.”

However, a U.S. official immediately responded that ”yes, we are negotiating with Brazil, Argentina, Paraguay and Uruguay as a single bloc, but within the context of the FTAA.”

A Brazilian official said Amorim’s statement was misinterpreted by the press, and that the minister ”has always made it clear that what we want is a flexible FTAA, precisely because there are issues that the countries aren’t ready to negotiate yet.”

”There can be no surprises here. Everything has been cooked up already,” said Argentine businessman Antonio Estrany, who took part in this week’s business forum in Miami, parallel to the FTAA talks.

”If there were surprises, this meeting would be a failure for its organisers,” he added. ”The United States isn’t going to negotiate a separate free trade accord with Mercosur, because that would be a scenario much less favourable to U.S. interests than negotiations within the broader FTAA.”

Walter Cancela, the director of the Institute of Economy at Uruguay’s public University of the Republic believes that Batlle’s aim to sign a bilateral free trade accord with the United States without insisting on major concessions on questions like farm subsidies is dangerous.

Instead, Uruguay should deepen its relations with Mercosur and negotiate as part of a united front, rather than limiting itself to complaints about its partners’ initiatives, Cancela told IPS.

Cancela, one of the most prominent economists in the leftist Broad Front coalition, which according to opinion polls is likely to come to power in the 2004 presidential elections, said Uruguay is a small country ”caught between Argentina and Brazil, and we can’t change that, which means the smartest thing to do is to try to influence Mercosur’s internal and external decisions.”

A different kind of internal dissent within Mercosur is the anti-FTAA movement, which is opposed to both the original broad accord demanded by business and the new, more flexible design – dubbed ”FTAA lite” – currently being discussed in Miami.

In Argentina the ”No to the FTAA” coalition of social movements, political parties and church groups will hold a ”popular vote” to allow the public to express their views on the pan-American free trade area, as part of a campaign running from Thursday Nov. 20 to Wednesday Nov. 26.

In Brazil, the movement is pressing for an official plebiscite on the FTAA to be held during the October 2004 municipal elections.

The Brazilian Social Forum, which drew more than 20,000 activists from 1,500 organisations to Belo Horizonte, the capital of the southeastern state of Minas Gerais, from Nov. 6-9 declared a loud ”no” to the free trade treaty.

In September 2002, around 60 civil society organisations in Brazil held a ”popular vote” in which some 10 million citizens rejected the FTAA.

The flexible agreement that began to be discussed this week in Miami looks like a good route for achieving a limited FTAA, but will amount to ”virtually nothing” – merely a stalemate between Brazil and the United States, which comprise the ”core of the main disputes” standing in the way of progress in the talks, said Pecequilo.

”The United States is neither yielding on what we want, nor is Brazil yielding on what they want,” since the U.S. market will not be opened up to Brazil’s most competitive exports and Brazil will not make the concessions demanded by Washington in the areas of services, investment, patents and government procurement, said the analyst.

Since the United States will not reduce farm subsidies or eliminate the barriers standing in the way of key Brazilian exports like sugar, beef, orange juice, tobacco and steel, refusing to join the FTAA would not amount to a big loss for Brazil, she argued.

However, other economists say that if were left out of the FTAA, Brazil would be hurt by the subsequent reduction in exports to the United States and to other Latin American countries.

* Marcela Valente in Argentina, Darío Montero in Uruguay and Rogelio Santo Domingo in Miami contributed to this report.