With annual economic growth rates of over 10 percent and attractive investment conditions due to low infrastructural and labour costs, Ethiopia is eagerly trying to rise from the status of low-income to middle-income country in the next 10 years.

Ethiopia, with some 94 million inhabitants, is the second most populous country in Africa after Nigeria, but it remains a predominantly rural country. Only 17.5 percent of the population lives in urban areas, mainly Addis Ababa.

It is also one of the continent’s fastest growing economies. Between 2015 and 2018 growth is expected to average 7.3 percent, according to a recent study by the United Nations Industrial Development Organisation (UNIDO).

While economic growth since 2006/2007 doubled per capita income to 550 dollars in 2012/13, and the percentage of people living below the national poverty line dropped from 38.9 in 2004 to 29.6 in 2011, government sources admit that eradication of poverty remains a compelling issue.“There is not a single country in the world which has reached a high state of economic and social development without having developed an advanced industrialised sector” – UNIDO Director General Li Yong

The official target of rising to a middle-income country is considered to be realistic, but an East Asian diplomat accredited to the African Union in Addis Ababa says there is reason to be sceptical, partly because although the amount of foreign direct investment (FDI) rose from 0.5 percent in 2008 to 2 percent in 2013, investors continue to face trade constraints.

According to UNIDO, these are mainly related to border-logistics. Djibouti, the main import-export seaport used by Ethiopia, is situated 781 km from Addis Ababa, which makes the cost of land transportation a critical factor.

It is against this backdrop that UNIDO has chosen Ethiopia, along with Senegal, as a pilot country for its ambitious inclusive and sustainable industrial development (ISID) programme, which aims to achieve industrialisation in developing countries in order to eradicate poverty and create prosperity.

According to UNIDO Director General Li Yong, “there is not a single country in the world which has reached a high state of economic and social development without having developed an advanced industrialised sector”.

What distinguishes the ISID programme is that “current modes of industrialisation are neither fully inclusive nor properly sustainable”, he added. UNIDO is therefore not merely promoting industrialisation but trying to approach the needs and challenges of the globalised world that demand future-oriented concepts.

Promoting the sustainability that should be inherent to industrialisation, UNIDO says that the ISID programme takes into account environmental factors together with its partner countries and organisations.

It also fosters an industrialisation that is inclusive in sharing the benefits of the generated prosperity for all parties involved, thereby promoting social equality within populations as well as an equal distribution between men and women to ensure that nobody is excluded from the benefits of growth.

To show how these objectives can be met and to promote ISID, UNIDO organised the Second Forum on ISID from Nov. 4 to 5 in Vienna. In an opening statement, U.N. Secretary-General Ban Ki-moon said: “We have a vision of a just world where resources are optimised for the good of people. Inclusive and sustainable industrial development can drive success.”

The Secretary-General, who is a strong advocate of the sustainable development agenda, also said that in order to achieve this objective, “industrial development must abandon old models that pollute. Instead, we need sustainable approaches that help communities preserve their resources.”

Prime Minister Hailemariam Desalegn of Ethiopia and Prime Minister Mahammed Dionne of Senegal – representing the two pilot countries chosen for ISID – commended UNIDO for implementing a partnership programme, and Ethiopia’s State Minister of Industry, Mebrahtu Meles, emphasised that building industrial zones will accelerate industrialisation, as has been done by Asian countries such as China.

Forum participants expressed optimism about Ethiopia achieving economic growth through inclusive and industrial sustainable development provided that leadership and vision focused on the country’s comparative advantages while improving infrastructure.

They said that regional integration could be key for the development of the country, and called for further exploration of UNIDO’s role as a catalyst of transformational change.

In particular additional efforts were required to enhance the productivity in existing light industries such as agro-food processing, textiles and garments, leather and leather products. There was also a need to diversify by launching new industries such as heavy metal and chemicals and building up high-tech industries like packing, biotechnology, electronics, information and communications.

The ambassadors of China, Japan and Italy to Ethiopia – Xie Xiaoyan, Kazuhiro Suzuki and Giuseppe Mistretta respectively – as well as business stakeholders and development banks assured their continued support in helping Ethiopia take the path towards inclusive and sustainable industrial development, mainly through UNIDO.

(Edited by Phil Harris)

By Roberto Azevêdo
GENEVA, Jul 29 2014 (IPS)

In the 1960s, there were high hopes for the development of the newly-independent sub-Saharan African countries but these hopes were quickly dashed following a series of shocks which began in the mid-70s, with the first oil price spikes, followed by a severe decline in growth and increase in poverty in the 80s and early 90s. However, by the mid-1990s, economic growth had resumed in certain African countries. Economic reform, better macroeconomic management, donor resources and a sharp rise in commodity prices were having a positive effect.

WTO Director General Roberto Azevêdo. Credit: WTO/CC BY SA-2.0

In the 2000s, many African countries witnessed high economic growth performance and during that period some of the world’s fastest growing economies were in sub-Saharan Africa. Angola, Nigeria, Chad, Mozambique and Rwanda all recorded annual growth of over 7 percent.

In 2012 Africa’s exports and imports totalled 630 billion dollars and 610 billion dollars respectively, ­ a fourfold increase since the turn of the millennium. And the long term prospects for growth are good. The Economist Intelligence Unit has forecast average growth for the regional economy of around 5 percent yearly from 2013-16.

Despite all this, the continent still plays a marginal role in the global market, accounting for barely 3 percent of world trade. One significant reason – although, of course there are others – is that African economies are still narrowly based on the production and export of unprocessed agricultural products, minerals and crude oil.“There is little doubt that the regional [African] market offers good scope for African firms to diversify their production and achieve greater value addition”

Now, due to relatively low productivity and technology, these economies have low competitiveness in global markets – apart from crude extractive products. The low productivity of traditional agriculture and the informal activities continue to absorb more than 80 percent of the labour force. And growth remains highly vulnerable to external shocks.

This story of half a century of struggle, set-backs and progress shows two things:

One, the road to meaningful and inclusive development still seems long.

Two, we are in a better position than ever to make real, sustainable progress.

Many countries are striving to do more in turning their strength in commodities into strengths in other areas,­ using commodities as a means of spurring growth across various sectors. The United Nations Economic Commission for Africa’s 2013 Economic Report echoes this ­ calling for the continent’s commodities to be used to support industrialisation, jobs, growth and economic transformation.

In line with this, I think there are a number of essential steps to take:

– diversification of economic structure, namely of production and exports;

– enhancement of export competitiveness;

– technological upgrading;

– improvement of the productivity of all resources, including labour; and

– reduction of infrastructure gaps.

Only by delivering in these and other areas can policymakers ensure that growth enhances human well-being and contributes to inclusive development. But how can we take these steps?

Of course I should say that although African countries share some common features, no unique set of policies, including those on trade and industrial policy, could ever fit for all in a uniform way. Even among the least-developed countries (LDCs), some are already exporters of manufactured products, although often they rely on a single product  while others are more dependent on commodities. Nevertheless, I think it is clear that some preconditions of success are universal.

African regional integration is of course very high on the policy agenda. There is little doubt that the regional market offers good scope for African firms to diversify their production and achieve greater value addition. Already now, manufactures constitute as much as 40 percent of intra-African exports, compared with 13 percent of Africa’s exports to the rest of the world.

The Bali Package, which World Trade Organisation members agreed in December last year, will help to resolve some problems. Inclusive, sustainable development was at the heart of the whole Bali project ­ and our African members played a crucial role in making it a success. It brought some progress on agriculture. It delivered a package to support LDCs. It provided for a Monitoring Mechanism on special and differential treatment.

And, in addition, Bali delivered the Trade Facilitation Agreement and this is a direct answer to some of the problems of fragmentation. Costly and cumbersome border procedures, inadequate infrastructure and administrative burdens often raise trade-related transaction costs within Africa to unsustainable levels, creating a further barrier to intra-African trade.

This Agreement will help to address some of these bottlenecks. It will support regional integration, and therefore complement the African Union’s efforts to create a continental free trade area. And it will begin to remove some of the barriers which prevent full integration into global value chains. As such it will create an added impetus for industrialisation and inclusive sustainable development.

And it is worth noting here that the Trade Facilitation Agreement broke new ground for developing and least-developed countries in the way it will be implemented.

Another vital issue here is the importance of agricultural development in industrialisation, and the role of industrial collaboration through regional cooperation. The contribution of the agriculture sector is of utmost importance for the establishment of a sound industrial base. It can provide a surplus to invest in industrial capacity building, and supply agricultural raw materials as inputs to the production process, especially for today’s highly specialised food processing industry.

Moreover, it can also significantly contribute to industrialisation by providing an ample supply of food products. This is because food constitutes a large share of what wage earners in African countries spend their money on. Its availability at low prices contributes to increase the purchasing power of wages, and therefore raise the competitiveness of a country in international markets. (END/IPS COLUMNIST SERVICE)

Excerpt:

Inequality, poor infrastructure and declining trade are some of the problems that Latin America needs to overcome if the region truly wishes to achieve a “golden age”, according to Peru’s President Ollanta Humala.

“We haven’t found the gold yet,” said Humala, a keynote speaker at the 6th International Economic Forum on Latin America and the Caribbean held this week in Paris. “We need to build a more modern and efficient state that offers services to everyone … We cannot overlook poor or vulnerable populations.”“Erasing inequality is absolutely fundamental because equality itself is a very important human right … At the same time, it’s a key to economic and social development. No country can reach high levels of development with huge levels of inequality” – Danilo Astori, Vice President of Uruguay

The conference, titled ‘Beyond the Golden Decade? Logistics and infrastructure, pillars of regional integration and global trade opportunities’, brought together policy-makers, economists, private-sector representatives and other experts from across Latin America, exploring measures to achieve inclusive growth and structural transformation in the region. Specific Caribbean issues seemed absent from the agenda, however.

The main mantra, repeated by many participants, was that inequality is a huge barrier to Latin America fulfilling its development potential.

“Erasing inequality is absolutely fundamental because equality itself is a very important human right,” the Vice President of Uruguay, Danilo Astori, told IPS. “At the same time, it’s a key to economic and social development. No country can reach high levels of development with huge levels of inequality.”

Income gaps between groups, whether based on ethnicity or gender, are not just “moral issues, they’re also macro issues”, said Julie Katzman, Executive Vice President of the Inter-American Development Bank, a co-organiser of the conference along with the Organisation for Economic Cooperation and Development (OECD) and France’s Ministry for the Economy and Finance.

Katzman said that 70 percent of those excluded from the financial system are women and that there was an 86 billion dollar financing gap for women-owners of small and medium-sized enterprises.

She told IPS that if this gap were closed by 2020, gross domestic product in Latin America would be 12 percent higher by 2030.

“The private sector has a big role to play,” she added. “When you combine financial inclusion and better infrastructure, then you can begin to address the issues being discussed.”

Danilo Astori, Vice President of Uruguay. Credit: Alecia McKenzie/IPS

She and other participants emphasised the need for better infrastructure as an “instrument of development”, the main subject of the conference. Roberto Zurli Machado, Director of Infrastructure and Basic Petrochemicals for Banco Nacional de Desenvolvimento Economico e Social (BNDES), said that the region had to modernise to bring its infrastructure to the desired level.

According to the OECD, logistic costs in the region account for between 18 and 35 percent of the value of products, compared with around 8 percent in OECD countries. Meanwhile, the quality of the road system in Latin America is below the level for middle-income countries, the organisation says.

Studies also indicate that improvements in logistics could increase labour productivity in the region by about 35 percent.

“All this affects the competitiveness of exports and the potential for integration,” said Angel Gurría, Secretary-General of the Paris-based OECD.

Peru’s President Ollanta Humala (left) meets France’s Economics Minister Arnaud Montebourg (centre) with OECD Secretary-General Angel Gurria (right). Credit: Alecia McKenzie/IPS

He said that developing an integrated logistics policy and improving the efficiency of customs procedures, through technology, could bring significant benefits in a short time span.

Such measures would also have an impact on inequality, Gurría said. “We need to raise awareness and to strengthen cooperation,” he told IPS, reiterating that “Latin America is not the poorest region but the most unequal.”

The conference, which brings together some 400 experts annually, is one way to address the region’s challenges, Gurría added. This year’s discussions are seen as particularly important because after a decade of relatively strong growth, “Latin America’s economic prospects are becoming more convoluted,” as the OECD puts it.

The region has been affected by the weakness of the euro zone and has experienced “declining trade, moderation of commodity prices and increasing reservation surrounding external monetary and financing conditions,” the organisation says.

It stresses that the rise in the prices of commodity exports “has led Latin American economies to substitute locally manufactured goods with imports, and contributed to a certain decrease in the region’s productive capacities.”

Achieving “improved logistics performance” would help bolster structural change in the region and “represent an opportunity for the insertion of the continent into the global trade,” according to the OECD.

Humala, the president of Peru, said that the region has great potential but faces many challenges, including the impact of climate change [the United Nations climate change conference – COP 20 – is scheduled to be held in Peru in December].

He said that Latin America would truly achieve a “golden age” when it solves its productivity problems and becomes more egalitarian. “The golden era is coming … hard times force us to look at opportunities,” he added.

The Itaipú hydrower complex, an example of bilateral energy integration that cannot go beyond the borders of Paraguay and Brazil. Credit: Darío Montero/IPS

By Marianela Jarroud
SANTIAGO, Oct 31 2013 (IPS)

Energy integration efforts in Latin America have been made in fits and starts, even though many clearly understand that the only way to solve the region’s energy shortages and high costs is by working together.

Experts who spoke to IPS agreed that the main difficulties in achieving energy integration lie in the differences between national energy supply systems. In the region there are countries with centralised state management and others with mixed public-private systems.

Other factors that affect integration are differences in fuel prices, uncertain availability of natural gas supplies, and socio-environmental conflicts over major energy projects such as mega-dams.

To move forward towards integration, they say, commercial and technical regulations must be adopted for a viable international market for electricity, to operate interconnected systems, harmonise national regulations, and coordinate planning for connected systems, in order to develop a regional market.

Common criteria for reliability standards, rationing priorities, and distribution of congestion pricing revenues also have to be defined.

The first in-depth study on these questions in Latin America was carried out in 1964, when the Commission for Regional Electricity Integration (CIER) was founded. It is currently made up of 10 countries, including the founders – Argentina, Bolivia, Brazil, Chile, Paraguay and Uruguay – as well as Colombia, Ecuador, Peru, Venezuela, and seven companies.

CIER has carried out more than 20 studies that have outlined the concrete possibilities for unifying the region’s power grids.

But Latin America is far from achieving energy integration, Oscar Ferreño, CIER international coordinator for generation, told IPS.

Among the factors standing in the way of integration are a lack of political will and the privatisation of a number of major power production and distribution companies and oil companies since the 1990s.

Ferreño pointed out that there is one interconnected area, among the founding members of the Mercosur (Southern Common Market) trade bloc – Argentina, Brazil, Paraguay and Uruguay (Venezuela recently became the fifth full member).

But he warned that “there is a natural barrier that is difficult to overcome: the Andes mountains.”

At any rate, several bilateral or multilateral initiatives for interconnection have been studied, and some of them could be implemented, he added.

One example is the electric power interconnection between Uruguay and Brazil, which involves a 420-km power line with a capacity of 500 MW and a high-voltage direct current converter station, that is to come onstream in mid-2014.

The Brazilian government is also discussing with Argentina and Paraguay the construction of a 321-km power line with a capacity of 2,000 MW to interconnect two binational hydroelectric dams: Yacyretá, shared by Argentina and Paraguay, and Itaipú, between Brazil and Paraguay.

The problem is that the Itaipú contract prohibits the sale of energy to a third country.

In the Andean region, meanwhile, two projects are still only on paper. One arose from a 2007 United Nations Development Programme (UNDP) study on the complementarities of energy resources in Bolivia, Chile, Colombia, Ecuador and Peru.

The other is the Andean Electric Interconnection, which would involve the five Andean countries and has the backing of the Inter-American Development Bank.

But the idea of establishing a regional energy network focuses on tapping the oil reserves of Argentina and Venezuela, the gas reserves of Peru and Bolivia, the hydroelectric systems of Chile and Brazil, and the region’s solar and wind power potential.

Ferreño said “energy integration is fundamental,” principally because of the variation in non-conventional renewable energies, like solar and wind power, which have a vast potential in Latin America.

“Wind can blow in the south at one point and not in the north, or it could be cloudy, so integration facilitates the homogenisation of the production of the different natural energies, which is essential,” he said.

The director of the TNS Latam consultancy, Fernando Meiter, agreed that “regional energy integration is still far off.

“It is impossible if there is no framework so that if one country has a surplus, it can be given to a neighbour. That’s basically the problem,” he said.

“Argentina has several gas pipelines to Chile and one to Uruguay, which are currently not in use. In the short term, I don’t think integration will be achieved,” Meiter said.

Argentina exported natural gas regularly to Chile until 2006, when it began to sell only small quantities because it had to cover its own domestic needs first.

Chile, even without resolving the question of the diversification of its energy mix, could turn to Bolivia, another large gas supplier. But there is constant diplomatic tension between the two countries over Bolivia’s long-standing demand for an outlet to the Pacific Ocean, which it lost to Chile in the 1879-1883 War of the Pacific.

Bolivia currently exports significant volumes of natural gas to Argentina.

According to the Latin American Energy Organisation (OLADE), regional energy consumption amounted to 1,073 terawatt hours in 2010 at high prices, both for residential and industrial uses.

Official figures indicate that in 2011, Chile was the country with the sixth highest prices for the industrial sector in the Organisation of Economic Cooperation and Development (OECD), at 154 dollars per megawatt hour.

Meiter noted that one of the benefits of energy integration is the ability to negotiate prices as a bloc.

“For example, if Argentina, Chile, Brazil and Uruguay could jointly purchase natural gas from any of the Arab producers, if they went together to negotiate volumes, the prices would come down,” he said.

In his view, the Andes are not an obstacle for integration, “because the infrastructure is already there. That means it’s a question of political will,” he said.

The Dominican Republic first expressed interest in joining the 15-member Caribbean integration grouping CARICOM in 1989. Now, 14 years later, the Spanish-speaking country with a population of nearly 10 million may finally get its wish.

Venezuelan President Nicolás Maduro wants to see greater cooperation between his country and the 15-member Caribbean Community. Credit: Agência Brasil/cc by 3.0

In the words of President Danilo Medina, “We have come with open arms, promising to work hard to make the region a better place.”

Medina made his pitch to Caribbean Community leaders who met here over the past four days for their annual summit. He praised the “visionary leaders” from Barbados, Trinidad and Tobago, Guyana and Jamaica, who 40 years ago signed the Treaty of Chaguaramas that paved the way for the establishment of the regional integration movement.

“They built the foundation on sound principles which has allowed 15 full members and five associate members. We must have the political will and, therefore, we have decided to have open-arm dialogue to gain entry to CARICOM,” Medina said.

The new CARICOM chair and prime minister of Trinidad and Tobago, Kamla Persad Bissessar, said Caribbean leaders had some reservations related to immigration, as well market size in the context of the CARICOM Single Market and Economy (CSME) that allows for the free movement of goods, skills, labour and services across the region.

“I believe in principle that the heads [of state] were not adverse to the Dominican Republic joining. However, there remain issues some heads wanted clarification on and that matter has now been put forward to the inter-sessional [to be held in February] for a more targeted discussion,” she told IPS.

CARICOM leaders are concerned that with a population of 9.5 million, the Dominican Republic’s entry could adversely impact the economies of some of the smaller member countries, she added.

Medina was not the only visitor to the four-day summit here.

Newly elected Venezuelan President Nicolás Maduro may not have the charisma so strongly associated with his predecessor, the late Hugo Chavez, but he too came to the summit promising “goodies” for regional leaders in a bid to solidify the relationships that Chavez himself would have enhanced.

Guyanese President Donald Ramotar told IPS that during his closed-door half-hour meeting, Maduro made a presentation “offering some very concrete areas in which we could cooperate and Venezuela is ready to work with CARICOM…including on the vexing issue of transport.”

Ramotar said he would describe the talks as “a re-affirmation of the Chavez policy”, adding “that he [Maduro] is continuing that strong solidarity trust President Chavez had made in the past.”

Prime Minister Persad Bissessar said Maduro proposed the re-activation of the Joint CARICOM-Venezuela Commission “based on the long-standing trade and investment agreement which could lead to increased trade, investment and economic and other activities.

“In this regard, several proposals were put forward touching on security, air and sea transportation, energy, a social and cultural plan and developing ties between CARICOM and Mercosur,” the Common Market of the South which was founded in 1991 by Argentina, Brazil, Paraguay and Uruguay, she said.

Ramotar said there was a general consensus that Caracas needed to work with the region given its close proximity.

“I think working together would help us to pool our resources,” he said, telling IPS that regional leaders had welcomed the support for transportation given that Caracas has its own airline and cheaper fuel.

“Those are, of course, things that have not yet been thrashed out, but these are areas I can see where we have great possibility,” Ramotar said, adding that security was also another area for cooperation because “the fight against drugs affects all of us and drugs pass through the region.”

The CARICOM summit here was expected to focus on air and sea transportation, as a bedrock component of the integration movement.

“Transportation is key to the integration process and we have to make sure we get it right this time. If the whole question of integration is going to make any sense we need to address this issue frontally,” Antigua and Barbuda Prime Minister Baldwin Spencer told IPS.

His counterpart from Grenada, Dr. Keith Mitchell, making a return to regional politics after a five-year absence, told IPS, “The fact is that while we are trying to advance the CARICOM Single Market and Economy, we still do not have transportation to effect those changes.”

The CARICOM chair said the leaders had agreed to the re-introduction of the single domestic space (SDS), which expedites regional travel for citizens from member nations. They have also given their full support to a proposal by Haiti to convene a high-level meeting on persons with disabilities and special needs, and on the issue of genocide and slavery reparations.

“We have in my view a very strong case,” said St. Vincent and the Grenadines Prime Minister Dr. Ralph Gonsalves, who has been pushing for reparations from Europe for the slave trade.

Brazil still looks almost exclusively to the Atlantic - where this grain pipeline operates in the Suape Port complex - turning its back on the Pacific. Credit: Mario Osava/IPS

By Mario Osava
RIO DE JANEIRO, Jul 3 2013 (IPS)

The Mercosur and Pacific Alliance blocs can strengthen Latin American integration rather than weaken it, analysts say.

The Pacific Alliance, which groups Chile, Colombia, Mexico and Peru, “opens up new prospects for Latin America,” including more balanced integration, said Peruvian sociology professor Enrique Amayo from the Paulista State University in Araracuara, 270 km from São Paulo.

Mercosur (Southern Common Market), made up of Argentina, Brazil, Uruguay and Venezuela – along with Paraguay, which has been suspended since President Fernando Lugo was ousted in June 2012 – is “a closed bloc, where the size of the country is absolutely decisive.”

Brazil has consistently attempted to impose its rules on the rest of the members, which has stood in the way of agreements, said Amayo, who specialises in economic history and Latin American international studies.

The emergence of an association of four important regional economies – the Pacific Alliance was launched in June 2012 – with a strategic geopolitical location on the Pacific Ocean establishes “a balance of power in South America and Latin America, which favours horizontal negotiations by giving a sense of reality” to Brazil and Mercosur, he said.

This could foment closer ties between the two blocs, in conditions of equality, with neither “unelected leaders nor charismatic informal leaders,” said Amayo. But Mercosur´s current problems make that unlikely.

Retired Brazilian ambassador José Botafogo Gonçalves said Brazil would have to “modify its vision of regional integration.” But, he said, that will not happen under the government of Dilma Rousseff, and “dynamic opportunities” offered by the countries of the Pacific, like Peru and Colombia, whose economies are now growing much faster than Brazil´s, will be missed.

Mercosur served the needs of Brazil “in the historical context” of the 1980s and 1990s, when the import substitution model was being abandoned, the country faced a severe financial crisis, and it was forced to overcome the isolation of its internal market.

Brazil´s opening up of trade made sense. It began with Argentina in 1988 and expanded to Paraguay and Uruguay when the bloc was founded in 1991, “an important step for Brazilian industry and agriculture, which became more competitive,” said Botafogo Gonçalves, vice president emeritus of the Brazilian Centre on International Relations (CEBRI).

But Mercosur “no longer responds to Brazil´s needs” in the current changing global economic situation, he said. Its industry has lost competitiveness and the bloc´s market “is not enough to help it recover,” he said.

Industry now needs to be integrated in global production chains, without insisting that “100 percent of the inputs must be national,” because competitiveness of exports will not be achieved that way, the ambassador said. For example, Mexico, by opening itself up to the maquila – for export assembly plants – in the past few decades, chose a path that today is bearing fruit, he said.

In Botafogo Gonçalves’ view, “there is still space for a broad, pragmatic accord” that would promote production chains that include countries of the Pacific Alliance, boosting the efficiency of Brazilian industry.

What is needed is not just an agreement on reducing tariffs, which have scant importance today because all duties have been drastically reduced, but “a real policy on integration, comprising regulations, energy, investment, infrastructure, intellectual property and communication,” he said.

But the diplomat said he did not see “brilliant prospects” in that area, because of “the irritated reactions” he has observed in the government, which prefers to seek ties with Bolivia and Ecuador, rather than with more promising economies like Peru and Colombia.

The biggest problem in Mercosur, which is still essential for Brazil´s foreign trade despite the sharp drop in exports to Argentina, is that these two large partners abandoned their integration and free trade policies over the last decade, he said.

Argentina did so because of its financial difficulties, not because of opposition to its giant neighbour. But in Brazil´s case, both former president Luiz Inácio Lula da Silva (2003-2011) and Rousseff turned their back on regional integration in practice, while continuing to support it rhetorically, Botafogo Gonçalves criticised.

Amayo´s concern, on the other hand, focuses on Brazil´s attitude as an emerging power towards small countries, which it grants unequal treatment in negotiations. He mentioned the example of Paraguay and Uruguay, in Mercosur.

He also said the expansion of Brazil´s multinational companies, backed up by abundant credit from this country´s state development bank, has drawn negative reactions.
The Pacific Alliance was not created with the intention of “dividing” the region, but to address the interests of its members and their long history of relations across the Pacific region, “and not just China and Japan,” Amayo said. “No one ever asked whether Mercosur divided Latin America,” he added.

Little attention is paid in Brazil to the history and reality of the countries of the Pacific region, in the country´s diplomacy and in research institutions, which rarely approve financial support for studies about the other side of the continent, he lamented.

The new bloc got off to a dynamic start with Costa Rica and Panama asking to join, and many others requesting observer status, which Uruguay, for instance, has already been granted.

Brazil should waste no time in understanding that strategic position “matters more than size,” Amayo said. The Alliance is not only in the Pacific region, but is “bi-oceanic,” with privileged access to the fastest-growing area in the global economy – the Pacific rim – as well as to the Atlantic, he noted.

By Roberto Savio
ROME, Mar 19 2013 (IPS)

What is Hugo Chávez’s legacy to Latin America? The best way to evaluate a head of state is to examine what is left behind after his or her death. In the case of Chávez, his image is obscured by a series of ideological and cultural prejudices that hide a clear perception of who he was.

Chávez’s obvious faults have been exaggerated out of proportion by the ideological radicalisation that accompanied him. He was provocative to the point of using Iran, Libya and Syria to symbolise his independence from the United States.

However, his goal was not to find legitimacy as an international leader, but as a regional one. For this reason, he tried to highlight everything that could show up Washington’s impotence and decline.

His foreign policy, focused essentially on Latin America, was very simple: let us recover the message of our liberator, Simón Bolívar, to unite our peoples and free ourselves from the historic domination of the United States.

The arrival of former U.S. president George W. Bush was providential for Chávez: as the worst face of the United States, he was a useful confirmation of the Venezuelan president’s denunciations. With President Barack Obama, in contrast, he had to tone down his criticism.

His reputation as an international pariah was not due to his support for Cuba, which today is not regarded by anyone as a revolutionary or terrorist threat.

But a head of state who embraces “representatives of evil” like (the late Libyan leader) Muammar Gaddafi or (Iranian President) Mahmoud Ahmadinejad is bound to spark rejection throughout the West, not only in the United States.

This was combined with a lack of understanding of Venezuela, since Chávez’s verbosity and his use of language that was neither elegant nor formal, but appropriate for stimulating the participation and identification of the poorest classes – his real political target – was interpreted in the West as demagoguery rather than as a means of communication. But this was the way Chávez was able to reach the popular classes not only in Venezuela, but also in Latin America as a whole.

Almost 200,000 poor Latin Americans recovered their sight thanks to Chávez, who paid for cataract operations in neighbouring countries, carried out by brigades of Cuban doctors. (People in Cuba were disconcerted to learn that one of the beneficiaries in Bolivia turned out to be sergeant Mario Terán, who killed revolutionary icon Che Guevara in La Higuera).

It is a fact that, thanks to Chávez, Latin America has made great strides towards integration. His name is associated with the Union of South American Nations (UNASUR), the Bolivarian Alliance for the Peoples of Our Americas (ALBA), the Bank of the South (BanSur) and the boost that Venezuela’s incorporation has given to the Southern Common Market (Mercosur).

It is easy to brand all this as populism. But labels do not cancel an uncomfortable reality: in Latin America, the middle class is greatly outnumbered by the poorer classes. And traditional politicians were only interested in the middle class (if not merely the elites).

The region’s shift to the left in the last decade is surely due to the brutal impact of the neoliberal policies of the previous decade; but also to the entry of native peasants and the poorest segments of the population into the political arena.

This is why Chávez’s legacy is much greater than it might appear. It seems inevitable that Venezuela will have to cut back on its international solidarity (a worrying prospect for Cuba, in particular) and will cease to be a paradigm in the regional political scenario.

On the other hand, in this era of globalisation, the effort to take up again the ideals of Bolívar is inescapable and represents a true alternative to the betrayal of the liberators by the elites of the times. (Bolívar himself, in a famous phrase, said “he who serves a revolution ploughs the sea.”)

Only the selfishness of the elites can explain why Latin America, a substantially homogeneous region, more so than Europe and Africa, let alone Asia, has not integrated so as to compete more strongly and effectively at a global level.

While geopolitical influence in this century is swinging towards Asia, where China and India individually are more powerful than all of Latin America, it is in this region where new policies and pathways to more participative democracy are being forged, not in Europe, Africa or Asia.

It is hard to say whether Latin America will ultimately discover the road to unity. Chávez has done much more in this direction than any other head of state in recent history. This is his legacy. Time will tell whether, like Bolívar, he has ploughed the sea.

If he has, Hugo Chávez will go down in history as a frustrated dreamer, and details like his friendship with Ahmadinejad, his excessive verbosity or his vulgar language will not help explain the failure of Latin American unity. That will be the responsibility of the entire political class and its national egocentricities.

Excerpt:

Cuba’s Cienfuegos refinery, revived thanks to support from Venezuela. Credit: Jorge Luis Baños /IPS

By Marianela Jarroud
SANTIAGO, Mar 14 2013 (IPS)

Venezuela will keep in place the regional energy integration policies promoted by the late president Hugo Chávez if he is succeeded by acting president Nicolás Maduro, experts on regional relations told IPS.

It will do this in spite of the growing internal economic difficulties that could complicate the country’s ability to maintain external cooperation commitments.

“It’s possible that Venezuela might reduce aid to other countries in order to deal with internal problems, but not if it risks losing its regional and international influence and leadership role,” Sébastien Dubé, an expert in political science at Chile’s Diego Portales University, told IPS.

Dubé said he had no doubt that if Maduro wins the presidential elections on Apr. 14, as expected, there will be continuity in Venezuela’s foreign policy and especially its external energy cooperation.

Maduro’s rival will be Henrique Capriles, the governor of the central state of Miranda, who was defeated by Chávez in the Oct. 7, 2012 elections. Analysts predict that the wave of grief over the 58-year-old Chávez’s death from cancer on Mar. 5, and the strong majority support that he enjoyed, will carry his chosen successor, vice-president Maduro, into office – bar surprises.

“Maduro will want to maintain the geopolitical influence that Chávez’s leadership brought to Venezuela,” Dubé said, pointing out that Maduro was foreign minister from 2006 until January this year.

In his view, “the strong ideological focus of the Venezuelan government indicates that if implementing its political strategy means continuing to run a fiscal deficit, so be it.”

Regional energy integration was one of the key focuses of Chávez, who governed the South American oil-producing country since 1999.

By means of the policy of energy integration and cooperation promoted by the state oil company Petróleos de Venezuela S.A. (PDVSA), Chávez distributed energy in the region in order to boost the development of the countries that had the most difficulty paying their energy bills.

The foremost example is the Petrocaribe energy alliance, created in 2005 and involving 18 countries to which Venezuela supplies up to 185,000 barrels per day (bpd) of crude.

Petrocaribe offers financing for up to 50 percent of the value of the oil, payable over 25 years at an interest rate of two percent.

The Petrocaribe programme extended new benefits to more countries than came under the San José agreement, signed in 1980, under which Mexico and Venezuela jointly supplied oil on preferential terms to 11 Central American and Caribbean countries.

In the view of economist Manuel Riesco, of the National Centre for Alternative Development Studies (CENDA), Chávez, “as a good soldier and exceptional disciple of (independence hero Simón) Bolívar, gave due importance to a key element of state developmentalist strategy in Latin America: regional integration.

“Integration is inevitable in Latin America, partly to compensate for the enormous gravitational attraction exerted by our giant neighbour to the North (the United States), which constantly draws our countries individually into its orbit,” he said.

It is also essential “in order to create the conditions to be able to compete in the global market of the 21st century, made up of huge market-states with hundreds of millions of people,” he added.

Over the last decade, Venezuela has also signed special energy cooperation agreements with Argentina, Brazil, Colombia, Ecuador, Peru and Uruguay. In addition, a partnership was formed between PDVSA and Petrobras, the Brazilian state oil company, to build the Abreu e Lima Refinery in Brazil.

Thanks to high oil prices, Venezuela “may have provided relief for the countries of Latin America that had preferential access to its crude, but it remains to be seen whether this policy is sustainable over time,” according to economist Alfonso Dingemans, who has a doctorate in Americas studies from the Institute of Advanced Studies of the University of Santiago.

Only time will tell whether Venezuela’s political and economic circumstances will allow “what has been maintained only by the charisma and leadership of Hugo Chávez to be institutionalised,” he told IPS.

“I doubt Maduro has the same political capability to continue developing the Bolivarian programme (of energy cooperation), or that the Venezuelan people would accept all the costs implied,” he commented.

“At some point the costs will become unsustainable,” he said.

In Dubé’s view, in contrast, for a future Maduro administration “to break its commitments would be a sign of failure, which the government will try to avoid at any cost.

“The calculation is that oil prices may rise again,” above 100 dollars a barrel because of growth in world demand, and that would enable Venezuela to keep its agreements intact, “an important factor in maintaining its ties and the influence it has over the countries that benefit from its assistance,” he said.

Dubé said that Chávez’s successor will also face greater difficulties on the domestic front, because of the demands of the Venezuelan public, in an economic environment in which several problems have accumulated, such as a high rate of inflation, the impact of the currency devaluation in February and the loss of purchasing power.

“The scenario in Venezuela is complex,” and that could cause problems for the countries that benefit from its cooperation, he said. “No other country in ALBA (the Bolivarian Alliance for the Peoples of Our America) has the energy or financial capacity to provide the support that Venezuela is giving them now,” he said.

ALBA, which currently has eight full member countries, was formed in 2004 on Chávez’s initiative, and focuses on the struggle for social inclusion and “21st century socialism”.

One of the members, Cuba, could find itself particularly affected by a change of strategy in Venezuela’s integration policy. At present it receives at least 53,000 bpd of oil on preferential terms, as part of a series of bilateral cooperation agreements.

“Aid from the Chávez administration was quite important for the Cuban economy, and the danger is that if that support disappears or diminishes, the island’s economy will take a nosedive again,” Dingemans said.

Riesco stressed that the energy agreements established by the Chávez government were not unilateral subsidies granted by Venezuela to other countries.

For instance, he said, “the favourable but reasonable long-term prices for oil supplied to Cuba are partly compensated by the significant and valuable contribution of Cuban doctors working in Venezuela.”

Dubé said as well that cooperation between Caracas and Havana is mutual, and that both countries will continue to need each other. “In political terms, Maduro needs the strategic, political and ideological support of the Castro brothers (Fidel and Raúl) to maintain his regional influence,” he said.

However, in his view, a victory for opposition candidate Capriles could bring about “a radical change in Venezuela’s foreign policy, realignment with the United States and countries with liberal (free market) economies, and an end to subsidies for Cuba and the ALBA countries.”

Riesco predicted that the policies of integration promoted by Chávez will continue in one form or another, because “they reflect the deepest strategic interests of the region and of Venezuela.”

Cuban diplomacy will be working full blast this year, promoting its own approach to integration in line with the needs and goals of the Community of Latin American and Caribbean States (CELAC), a regional body that excludes the United States, Cuba’s leading ideological opponent.

It is precisely this independence from Washington that most attracts Havana to CELAC, whose presidency will be occupied until 2014 by Cuban President Raúl Castro, together with Chilean President Sebastián Piñera and Costa Rican President Laura Chinchilla.

By special resolution, this three-pronged presidency will be supplemented by Haitian President Michel Martelly, who also heads the Caribbean Community (CARICOM) this year.

CELAC is a diverse, plural and politically and ideologically tolerant bloc that gathers all the countries of Latin America and the Caribbean. Thus the challenge put to member countries even before CELAC’s founding meeting is to tread carefully and find a path of agreement and consensus, with the overall aim of moving forward towards regional integration and growth, striving, in particular, to achieve a socially-just economic development.

“We undertake to work for peace, justice and development for Latin America and the Caribbean, and for cooperation, understanding and solidarity among all Latin American and Caribbean peoples,” Castro said on Monday, upon taking office as CELAC president, but acknowledged that regional unity must be built on the recognition of the region’s diversity.

The 33-country bloc closed its first formal summit on Monday in the Chilean capital of Santiago, and has scheduled its second summit for a year from now, in Cuba.

The Cuban government has been a strong supporter of the regional integration body since the idea for its creation first came up four years ago, at the Latin American and Caribbean Summit on Integration and Development held in Brazil.

That 2008 summit, the first regional meeting of its kind to be organised without engaging the United States and Canada, was followed two years later in 2010 by a similar gathering, this time in Mexico, where participant countries agreed to create CELAC. The bloc was finally founded the following year at a third meeting in Caracas.

Cuba made its preference for a U.S.-free integration known in June 2009 when the United States voted against the Caribbean island’s request to be reinstated as a member of the Organisation of American States, from which it was suspended by consensus in 1962 after embracing Marxism-Leninism.

The Castro administration also stepped up its active involvement in forums that represent the countries of the region, including Caribbean island nations.

“Strengthening, expanding and harmonising these bodies and groups is the path chosen by Cuba; (no longer holding on to) the impossible illusion of returning to an organisation that refuses to reform and has been condemned by history,” Castro said.

Cuba is a founding member of the Bolivarian Alliance for the Peoples of Our America (ALBA), of which Antigua and Barbuda, Bolivia, Dominica, Ecuador, Honduras, Nicaragua, Saint Vincent and the Grenadines, and Venezuela are also members. It also has close and active political and cooperation ties with CARICOM.

Cooperation with countries of the South is one of the strengths of Cuba’s foreign policy, a strategy which opens up significant opportunities for Latin America and the Caribbean to implement major projects despite limited resources.

“We all have advantages and experiences that we can contribute,” Cuban Foreign Minister Bruno Rodríguez said shortly before the Santiago summit.

As an example of this, Rodríguez mentioned the assistance provided by his country to Haiti, which focuses particularly on health aid.

Solidarity is, in fact, the principle chosen by Cuba to guide cooperation among the countries of the region, moving away from conditions imposed from outside that have no place in a “new Latin America”, Deputy Foreign Minister Abelardo Moreno added.

While Cuba strengthens its regional environment, expectations that its relations with the United States will improve with the second administration of Democrat Barack Obama are low. Several commentators in the interactive Café 108 feature of the IPS Cuba website agreed that there is little chance that the U.S. will reconsider its relations with Cuba.

In the opinion of political scientist Esteban Morales, the United States is facing a difficult time, both on the domestic and on the international front, and in that context a change in attitude towards its socialist neighbour is highly unlikely. Morales, however, does not rule out the possibility of an indirect route, opened up as a result of the “changes (in U.S. relations) with Latin America and the Caribbean”.

“The last two years (of the Obama administration) may hold the greatest possibilities in this sense, depending on how well Obama does now,” Morales added.

Journalist Roberto Molina, for his part, does not expect to see any change “in the suspended state of relations between the two neighbouring nations, which have been enemies since the early 1960s.”

“Obama has too many pending issues to address – immigration, fiscal reform, a war and other potential conflicts, and a shaky economy – to be thinking of Cuba as a foreign policy priority,” Boris Caro, a Cuban journalist living in Canada, said.

In his last speech of 2012, Castro announced that he will put all his efforts and energy into his role as CELAC president, but he did not forget to remind “the U.S. government once again that Cuba is willing to sit down (with the U.S.) and find a solution to all their bilateral problems in a dialogue based on mutual respect and sovereign equality.”

Chilean President Sebastián Piñera, at the closing ceremony of the CELAC summit. Credit: Marianela Jarroud/IPS

By Marianela Jarroud
SANTIAGO, Chile, Jan 29 2013 (IPS)

Openly conceding the differences in their ideological, economic and geopolitical views, leaders and high-level representatives of the 33 member countries of the Community of Latin American and Caribbean States (CELAC) committed themselves to integration at their first ever summit.

CELAC “definitely” empowers the region’s voice in the world, said the executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, at the conclusion of the summit in Santiago on Monday.

“I am convinced that this new mechanism is a strong signal, first of all, that Latin America and the Caribbean are no longer what they used to be,” and have experienced “very significant changes”, she said.

Designed in 2010 in Mexico, and created in November 2011 in Caracas, CELAC represents about 600 million people and is the first regional bloc in five decades that leaves out the United States and Canada and includes Cuba.

Rightwing Chilean President Sebastián Piñera said it is “an inclusive (process), because it reaffirms convergence in the same common space, while it has projected itself strongly abroad.”

The host president’s words were along similar lines to those written by Venezuelan President Hugo Chávez, his complete opposite ideologically, in a letter that was read at the summit. Chávez is convalescing in Havana from his fourth cancer operation, which took place on Dec. 11.

The summit was marked by an air of expectancy about the contents of the letter, read out by Venezuelan Vice President Nicolás Maduro. CELAC “is the most important project of political, economic, cultural and social unity in our contemporary history,” Chávez said.

The presence from afar of the Venezuelan leader, one of the promotors of CELAC together with then presidents Felipe Calderón (2006-2012) of Mexico and Luis Inácio Lula da Silva (2003-2011) of Brazil, silently stalked the corridors of the summit and breathed suspense even into the meeting that CELAC leaders held Jan. 25-26 with the European Union.

“We have every right to feel proud: the nation of republics, as Simón Bolívar the Liberator called it, has begun to take shape as a beautiful and happy reality,” he wrote.

Chávez condemned “the shameful imperial blockade of the revolutionary Cuba of Martí (the Cuban independence hero and writer)” and “the continued colonisation and now the progressive militarisation of the Malvinas (Falklands) Islands,” the British overseas territory in the South Atlantic that Argentina claims as its own.

He also called for support for Cuban President Raúl Castro, who took over the temporary presidency of CELAC.

Bárcena said, meanwhile, that countries in Latin America and the Caribbean “are in a better economic situation, are more resilient from the economic point of view, and also from the social point of view, although there are many pending debts.”

She said the region “is well aware of the gaps that need closing internally, and afterwards, if we are more connected, we will be able to relate to foreign countries with greater strength.”

Bárcena said the region has become conscious of the importance of promoting trade between countries.

She added, “If regionalism and integration are dynamised, (production) chains of greater value can be created in the region, and with better articulation, we can (enter into more advantageous) relationships with the Asia-Pacific countries, Europe, or the United States.”

The governments represented at the summit reached convergence on Argentine sovereignty over the Malvinas/Falklands Islands, rejection of the U.S. embargo of Cuba, and the need to reduce the enormous inequalities in the region.

But they expressed divergence when it came to debate on foreign investments in the region and on historic geopolitical demands.

Castro said that “transnational corporations, primarily from North America, will not give up control of energy, water and strategic mineral resources that are becoming scarce,” while he stated that his taking over the CELAC presidency was “a recognition of our people’s selfless struggle for independence.”

For his part, Ecuadorean Foreign Minister Ricardo Patiño called on the Organisation of American States (OAS) to “make reparations to Cuba”, which was suspended from the body in 1962.

When it was the turn of Bolivian President Evo Morales, he insisted on his country’s historic demand for a sovereign outlet to the Pacific Ocean, which it claims from Chile. Piñera replied, and an extended discussion took place between the two in the forum.

Morales also called on the “brothers” of the insurgent Armed Revolutionary Forces of Colombia (FARC) to come to a peace agreement.

They must “understand that in these times, revolutions are not made by bullets but by voices, in democracy, without violence, with awareness and not by vote-buying,” said Morales, in words that earned him the thanks of Colombian President Juan Manuel Santos.

Bárcena said that the countries of the Americas marching towards unity in diversity is part of the new impetus that CELAC brings. The three realities, made up of the Caribbean and Mexico, Central America and South America, “can dialogue in a much broader and I would say much more pragmatic environment, each with its own model,” she said.

In her view, “there is more convergence than before, and I would say that the guiding principle here is the fight against inequality, because all the countries have realised that inequity conspires against technical progress, security, democracy and, above all, against productivity.”

In contrast, international analyst Raúl Söhr held a more cautious and less optimistic view. He said, “integration does not happen because mechanisms are created, but because there is political will, and when it comes to that there is still great divergence” within the region.

“The mechanisms keep proliferating, with the creation of the Pacific Alliance (Chile, Colombia, Mexico and Peru), the Union of South American Nations (UNASUR), CELAC, and the OAS, but at summits like this one, only generic declarations can be made in favour of what is good and against what is bad,” the Chilean expert said.

The second CELAC Summit will be held in 2014 in Havana, at a date yet to be announced.

To go down fighting in the Andean Community (CAN), with a combined market of 92 million consumers, or move up to the big leagues of Mercosur, with 275 million? This was the dilemma faced by Bolivia’s foreign trade strategists when it came to pursuing full membership in the bloc formed by its neighbours to the south.

The contrast is remarkable: last year, Bolivia’s exports to its partners in CAN – Colombia, Ecuador and Peru – totalled 774 million dollars, resulting in a trade surplus of 88 million dollars.

In the meantime, Bolivia purchased 2.427 billion dollars in goods from the countries of the Southern Common Market (Mercosur) that same year, while its sales to the bloc – excluding the main export, natural gas – were a mere 232 million dollars, according to figures from the National Institute of Statistics.

It should be kept in mind, as well, that these figures refer to trade with the founding members of Mercosur – Argentina, Brazil, Paraguay and Uruguay – and do not include Venezuela, which did not become a full member until mid-year.

This sizable trade deficit reflects an already consummated “invasion”, which many fear will be exacerbated by Bolivia’s entry as the sixth full member of the bloc.

“Before Bolivia has even entered Mercosur, the bloc has already entered Bolivia, and it is doing so to a growing extent,” through bilateral trade agreements, observed Gary Rodríguez, general manager of the Bolivian Institute of Foreign Trade (IBCE).

When natural gas, which represents 96 percent of Bolivia’s exports to Mercosur, is added to the equation, the balance is reversed, leaving Bolivia with a 1.692-billion-dollar trade surplus.

But gas exports are based on operations and agreements between national governments and do not involve the private sector, stressed Rodríguez in an interview with IPS at the IBCE headquarters in Santa Cruz, where he shares the same concerns and the same office tower with powerful business owners in the eastern Bolivian department (province) of the same name.

His greatest concern is for the future of Bolivian private companies. Last year, for example, 30 million dollars worth of shoes were imported from Brazil. In conditions like these, “we won’t be able to continue manufacturing ourselves,” said Rodríguez, who fears that the Bolivian market will be flooded with these and other goods in the event of a devaluation of the Argentine peso and Brazilian real against the dollar.

But Mercosur membership, the path chosen by the government of leftist President Evo Morales, could open up new prospects for Bolivian business owners “especially those involved in big agribusiness in eastern Bolivia,” Tullo Vigévani, a professor at Paulista State University in Brazil, told IPS.

CAN has been showing signs of weakening for decades, and the Pacific Alliance recently established by Chile, Colombia, Mexico and Peru “does not offer very promising horizons for Bolivia,” since these countries are also oil and gas producers and their economies “are closely integrated with the United States,” explained Vigévani, a specialist on integration processes, and particularly on Mercosur.

Joining Mercosur will help Bolivia “avoid isolation” and open up the possibility of tapping into a large regional market. Nevertheless, concerted efforts by the governments of the countries involved to ensure balance will likely be required, based on the prior experience of Mercosur itself, he added.

This assessment is backed by Jerjes Justiniano, the Bolivian ambassador to Brazil. “If we join Mercosur, we will have significant opportunities to grow as a nation and to improve working conditions,” he said.

In any event, Vigévani stressed that the incorporation protocol signed by Morales on Dec. 7 at the bloc’s summit in Brasilia falls far short of signifying full membership in Mercosur, its customs union and its common market. This will require a lengthy period of negotiations which could stretch out for years.

The analyst pointed out that Venezuela signed the same agreement in 2006, and only became a full member six months ago. Venezuela’s full entry came after Paraguay – whose legislature was the only one in the bloc opposed to it – had its membership suspended due to the ouster of President Fernando Lugo, which the other members considered a violation of the Mercosur “democratic clause”.

There are a number of complex issues that must be dealt with in order for Bolivia to take its place in the trade bloc, such as adaptation to all of the legislation created by Mercosur in almost 22 years of existence, and the country’s current status as a full member of CAN.

According to Vigévani, it is “legally impossible” for Bolivia to be a full member of both CAN and Mercosur, as its government intends.

Rodríguez, however, hopes that the Bolivian government will keep its pledge to maintain its trade agreements with CAN while complying with its new commitments to Mercosur.

Whatever the case may be, Bolivia’s entry into South America’s biggest trade bloc fulfils a destiny that dates back almost half a century: in 1969 the La Plata Basin Treaty was signed in Brasilia by Bolivia and the four founding members of Mercosur, Vigévani recalled.

In political terms, Mercosur will be strengthened as “an axis of South American and Latin American life,” he said. However, the “solidity” of its incorporation will depend on the response of Bolivian institutions, so that the decision comes from the state and not only the current government, and reflects a national consensus, he stressed.

Vigévani also believes that Bolivia’s full membership would be advantageous for the economy of Mercosur, by fostering closer relations and helping to avoid obstacles such as those which recently affected the production and purchase of gas by Argentina and Brazil, paralysing infrastructure and industrial projects that would have been beneficial to all, he added.

With regard to the Morales administration, the Brazilian expert believes that it has renewed its priority focus on regional integration, after briefly placing its faith in the alternative of closer ties with the Asia-Pacific region, particularly China.

Although the Bolivian economy may be small, with a total gross domestic product of some 25 billion dollars (around one percent of Brazil’s GDP), its incorporation will enhance the consistency of the economy of all of the Mercosur countries, while giving the bloc greater political weight, he concluded.

* Additional reporting by Franz Chávez in Santa Cruz, Bolivia.

The nine-member Organisation of Eastern Caribbean States (OECS) is pushing harder for regional integration with the launch of a new parliamentary forum that it says will play a major role in its efforts to establish an economic union.

“If the OECS Economic Union, and one of its principal organs – the OECS Assembly – are to guide us in overcoming the obstacles to growth and development, then it cannot be the ‘talk-shop’ that our people mock so derisively,” host Prime Minister Baldwin Spencer said at the launch over the weekend.

He said the value of the OECS Assembly as a forum for regional dialogue cannot be overstated, insisting that he expects “robust debate in this Chamber on the direction that regional integration should take.

“The OECS Assembly will perform a vital democratic function: it will monitor and debate the implementation of the OECS Economic Union, bringing to bear the views of representatives from constituencies all across the Union,” he told the inaugural session on Friday night.

St. Vincent and the Grenadines legislator Rene Baptiste, who was elected as the Assembly’s first speaker, reminded regional legislators that “we have serious work to do.

“This is our occasion to write our history with our own hands and in our own words,” she said of the work of the Assembly, which will comprise five legislators from each independent member state and three from the legislatures of each non-independent country, with representation from both the ruling administration and the political opposition.

It will meet at least twice annually and is one of five principal organs established by the Revised Treaty of Basseterre establishing the Economic Union. Its most important function is to be a consultative body to enhance regional dialogue on the critical issues of integration and development and to make proposals to the OECS authority for the enactment of regional legislation binding on all member states.

Spencer reminded the Assembly of the failure of the Caribbean Community (CARICOM) initiative named the Assembly of Caribbean Community Parliamentarians (ACCP) which he said “fell into disuse even before it started”, adding its failure “should be a subject for early reflection by the OECS Assembly”.

St. Vincent and the Grenadines Prime Minister Dr. Ralph Gonsalves, who is also chairman of the sub-regional grouping, said the Assembly should not be regarded as “an intellectual or academic pursuit” and that hoped it would serve as a venue where all legislators would engage in a “profound consultative process in decision making hopefully that would evolve into actual law making and direct elections in the not too distant future”.

Gonsalves said that the configuration of the regional integration process was now changing and the sub-region, comprising Antigua and Barbuda, Dominica, Grenada, St. Lucia, St. Vincent and the Grenadines, Montserrat, St. Kitts-Nevis, Anguilla and the British Virgin Islands, must not be complacent.

“Do not for one moment think that we cannot suffer reversals in our subregional integration movement,” Gonsalves said.

“To be sure we have made immense progress since the original Treaty of Basseterre was signed in 1981. Our Revised Treaty of Basseterre of 2012 has made a quantum leap in regional governance and the creation of a single economic space, but challenges abound,” he said, noting that the global economic and financial crisis could have a serious effect on the socioeconomic development of the sub-region.

St. Kitts Nevis Opposition legislator Mark Brantley, who spoke on behalf of the sub-regional opposition grouping, used the occasion to plead for a more democratic process in the region.

He assured that while the cause of regional integration has the full support of the parliamentary opposition region, it was important to be accepted as “equal partners in the deepening and strengthening of our integration process”.

He warned against making the new Assembly a “forum for high sounding words and lengthy speeches when the harsh realities at home militate against good governance and democracy.

“Good governance at home has to be a prerequisite of good governance regionally. The parliamentary opposition cannot be included at the OECS Assembly in St. Johns but ignored or marginalised in Basseterre, Roseau, Road Town or The Valley,” Brantley said.

Brantley said that it is a matter of “tremendous regret” that some of the OECS countries still do not have Integrity in Public Life legislation or Freedom of Information legislation to give the populace a mechanism “to rein in the base impulse of governmental corruption.

“From Antigua to St. Kitts to Dominica to St. Lucia to St. Vincent… it seems that each round of elections is met by an equally acrimonious and expensive round of litigation,” said Brantley, noting that these election petitions prolong the electioneering well beyond the election cycle with its attendant debilitating effect on the psyche of the Eastern Caribbean people.

“In short, we must commit ourselves to strengthening our democratic traditions which makes us all strong at home and even stronger regionally,” he told the regional legislators.

Money changing hands will soon be a thing of the past as East Africa standardises an electronic payment system. Credit Miriam Gathigah/IPS

By Miriam Gathigah
NAIROBI, Jul 17 2012 (IPS)

For months now East Africans have been expectantly waiting for an economic revolution to begin as they anticipate the launch of a new standardised payment system that will integrate the electronic transfer of money in the region. But continued delays in the launch of the system have economists fearing that the weak financial infrastructure here is hindering its implementation.

The system, a replica of the Single Euro European Payments Area (SEPA), will make all electronic payments in the East African Community (EAC) domestic ones through harmonised laws, policies and regulations within the region.

Although people still make electronic payments across the region, it is often insecure. Currently, cross border transfers in East Africa also take a number of days to be processed.

But when finally launched, the system will be unprecedented in Africa. Not even the Southern African Custom Union, the world’s oldest union, has a common electronic payment system in place. Sources say that it will eventually lead to the creation of one central bank for Kenya, Uganda, Tanzania, Rwanda and Burundi, the countries involved in the formation of the system.

“This system is a step forward towards the establishment of one central bank in the region, as well as one common currency,” Dr. Danson Mwangangi, an economist and market researcher in East Africa, told IPS.

And it is also about integrating trade.

“This is about electronic transfers. A payment method that is increasingly becoming common as the East African Community continues to integrate trade,” explained an economist and policy analyst at the Central Bank of Kenya involved in the process, and who did not wish to be named.

But that future appears a long way off. Though the payment system was supposed to have been launched in April, it has yet to come into effect. And the Central Bank of Kenya, one of the architects of the project, has refused to divulge information about its progress or set a new launch date.

However, Dr. George Ntawagira, a Rwandese economist working in Kenya, told IPS that the delay could be because the region’s cash-based economy is characterised by weak financial infrastructure. At least 60 percent of all payments in EAC are made in cash, a system that is bulky, risky and often inefficient.

Ntawagira added that banking remained risky in the region as a significant number of banks in Kenya lose millions of shillings every year from illegal withdrawals by computer-savvy criminals.

“These kind of risks have to be minimised. Still, East Africans have great expectations for this system and there has been concern over the delay in the inception of it.

“But this is to be expected, the financial infrastructure is still too weak to support this system. One of the greatest challenges is the discrepancies in regulatory and supervisory frameworks.”

Meanwhile, Ntawagira said that most banks across East Africa still have different tax regimes that hinder financial integration.

He added that close supervision of all the banks in the region would be critical to the success of the system.

“Although it is rare to find supervisors across banks scrutinising each other, this is an important aspect of regional integration because weaknesses in one financial institution can be corrected to prevent it from putting the entire system at risk.”

Ntawagira was quick point out that even the highly successful M-PESA, a mobile phone system where a maximum of 500 dollars can be transferred from mobile phones to pay bills and accounts and even purchase airtime, faced numerous problems when first launched in 2007. This included issues of network connectivity and financial integration.

But, according to the World Bank, it has since become Africa’s success story and facilities payments totalling almost 320 million dollars a month in the region.

And economists still believe that the new electronic payment system will significantly change how money moves across the region’s borders. The system is expected to not only be more secure than the current banking structure, but also cheaper and more efficient.

“Currently, if you move to another country in East Africa, even temporarily, you will have to go through a number of complex procedures in order for you to open a new account in your new country.”

With the new electronic payment system, residents of East Africa will be able to continue using their existing bank accounts from their home countries while residing elsewhere in the region.

It is also hoped that the system will lead to increased investment.

“EAC has continued to struggle in their attempt to lure foreign direct investment (FDI). This has largely been due to poor infrastructure in all sectors, be it roads, financial and so on. This system might improve FDI,” economic analyst, Titus Mwakazi, told IPS by phone from Tanzania.

“An integrated financial market can enhance liberalisation of intra-trade, boost the development of viable projects, strengthen financial institutions, encourage innovation as well as the pooling together of scarce resources in the region,” he said.

Still, despite of the promise that an integrated financial system holds for the struggling EAC economy, it nonetheless still has with a number of challenges. This includes the issue of the uneven level of growth and sophistication in the banking sector in some countries like Rwanda and Burundi.

“Kenya has achieved a much higher level of growth compared to the other countries. A weak banking system in one country may compromise the success of the system by increasing the risk of cross border electronic transfer,” Mwangangi said.

Ernesto Reyna, environment minister, Dominican Republic, advocates the Caribbean Biological Corridor. Credit: Patricia Grogg/IPS

By Patricia Grogg
SANTO DOMINGO, Jul 7 2012 (IPS)

The protection and conservation of biodiversity figure among the most daunting challenges posed by climate change in the Caribbean islands, home to a wealth of endemic species of flora and fauna.

The Caribbean Biological Corridor (CBC), an initiative spearheaded by the Dominican Republic, Cuba and Haiti, with the support of international cooperation agencies, offers an opportunity for joint projects that will benefit biodiversity not only within their own borders, but in the Caribbean region as a whole.

In an interview with IPS, Ernesto Reyna, minister for environment and natural resources in the Dominican Republic, described the CBC initiative as a strategic alliance of essential importance for small island nations threatened by climatic variations, such as an increase in average temperatures and rising sea levels.

Increasingly severe storms, droughts and floods are also predicted for the region, posing a serious threat not only to the populations of Haiti and the Dominican Republic but also to their flora and fauna, which include numerous threatened and endangered species.

“Given the experience of Cuba, the difficult situation in Haiti and the interest shown by the Dominican Republic, we could say that this partnership among the three sister nations is a prime example of what can be done to promote the conservation of natural resources,” he said.

Reyna says that Jamaica, Puerto Rico, Guadeloupe and Martinique have expressed interest in participating in the process as observers and guests, and could eventually join in as full partners in the biological corridor, which serves as a sort of umbrella initiative for “practical action” projects.

The initiative provides a framework of cooperation for protecting natural resources and stemming the loss of biodiversity in the Caribbean region through environmental remediation and development of alternative livelihoods.

The CBC stretches roughly 1,600 km in length through the three current member-countries. In the Dominican Republic, it encompasses the Jaragua-Bahoruco-Enriquillo Biosphere Reserve and the Cordillera Central mountain range, up to the border with Haiti.

The Haitian portion includes the Massif de la Selle mountain range, Lake Azuei, Forêt des Pins, La Visite and the mountains of the Massif du Nord (the Haitian name for the range known as the Cordillera Central in the Dominican Republic). Haiti, the poorest country in the Americas, and the Dominican Republic share Hispaniola island, divided by a 382.8 km-long border.

The CBC also encompasses a large area of eastern Cuba, including the Sierra Maestra mountain range, Baracoa, Nipe and Sagua. Cuban academic and researcher Nicasio Viña is the current director of the initiative established by the three countries in 2007.

While connecting the landscapes, ecosystems, habitats and cultures of the three Caribbean nations, the corridor also grants special status to more than 60 protected areas which can facilitate investment for development, poverty reduction and the restoration of natural areas heavily impacted by human activity.

According to United Nations Environment Programme (UNEP) figures, in the Caribbean islands there are 23.5 endemic plant species per 100 sq km, which is 3.4 and 12 times greater, respectively, than the density found in the Atlantic Forest of Brazil, the tropical Andes, and Mesoamerica, a region encompassing southern Mexico and northern Central America.

The promoters of the CBC stress that efforts to protect and conserve this biological wealth must include poverty alleviation for the people who live in these areas in order to reduce pressure on biological resources. For Reyna, one of the biggest challenges lies in restoring the trust of local communities.

For this reason, he believes in ensuring community participation in project activities as well as the involvement of local government structures, such as watershed administrations, so that plans are not shelved.

The European Union provides funding for the initiative which is also supported by UNEP.

Although it has been in existence for several years, the CBC has been “relaunched”, according to Reyna. “It is a forward-looking project that is now reaching out to the other countries of the region, and I think the time has come for it to fully take off,” he said.

Among the projects already underway as part of the initiative is the Plant Propagation Centre in Dosmond, near Ouanaminthe, in northeastern Haiti. The centre includes a greenhouse with room for 600,000 plants, a germinator, a warehouse, an office and a multipurpose space.

Environmental problems facing Haiti include deforestation – its forest cover has been reduced to less than two percent of its total land area – and soil degradation. The border area between Haiti and the Dominican Republic is exposed to extreme weather events that exacerbate the area’s communities.

A bilateral agreement supported by Norway through the United Nations Development Programme, in force since last year, is aimed at increasing forest cover and improving the living conditions of communities on both sides of the border.

In the Dominican Republic, “an ambitious reforestation plan has resulted in an increase in  forest cover from 12 percent in 1967 to 39.7 percent today,” said Reyna.

But the abrupt rise in recent years of the water level of Lake Enriquillo, on the Haitian border, has created new environmental challenges and caused the loss of large areas of farmland.

Residents of the area told IPS that there are now species living in Lake Enriquillo that had never been seen there before, including crabs and fish like ‘shad’ and ‘guabina’. “Here we have always fished for ‘tilapia’ and ‘biajaca’, which are freshwater fish,” commented José Trinidad, a farmer from the border village of Jimaní.

Lugo supporters protest on the streets of Asunción. Credit: Natalia Ruiz Díaz/IPS

By Natalia Ruiz Diaz
ASUNCIÓN, Jul 5 2012 (IPS)

Paraguay’s isolation, following the impeachment and ouster of President Fernando Lugo 11 days ago,  has grown thanks to slender recognition for the new government and souring diplomatic relations with the neighbours.  

On Wednesday, Paraguay moved to downgrade diplomatic relations with Venezuela by withdrawing its ambassador in Caracas, citing “serious evidence of intervention by Venezuelan officials in the internal affairs of Paraguay.” 

Venezuela was admitted into Mercosur last week with the leaders of Brazil, Argentina and Uruguay taking advantage of the temporary suspension of Paraguay from the trade bloc, citing irregularities in the impeachment of Lugo and “rupture in the democratic order.” 

The Paraguayan parliament has resisted ratification of Venezuela’s  membership since 2006 when the accession protocol was signed by four Mercosur presidents.

Paraguay’s suspension from Mercosur – the Southern Common Market – and Unasur, the 12-member Union of South American Nations, was decided at their consecutive summit meetings in the western Argentine city of Mendoza on Jun. 29. 

“The suspension will cease when full restoration of the democratic order in (Paraguay) is verified,” says the Mercosur declaration, signed by presidents Cristina Fernández of Argentina, Dilma Rousseff of Brazil and José Mujica of Uruguay. The bloc stopped short of imposing economic sanctions.

The government of Franco, the Liberal former vice-president in Lugo’s administration, ran into difficulties soon after he was sworn in as president on Jun. 22. Only the Vatican, Canada, Germany, Spain and Taiwan have officially recognised Franco as the head of the new government.

No Latin American country has recognised Franco’s presidency as  as legitimate.   

At an extraordinary meeting of the permanent council of the Organisation of American States (OAS) in Washington on, Jun. 26, doubts were raised as to whether due process had been followed at Lugo’s impeachment. 

On Jul. 2, OAS secretary-general José Miguel Insulza, leading a fact-finding mission, met Franco and his foreign minister Jose Fernandez Estigarribia. Insulza is expected to submit a report to the permanent council later this week. 

Speculations continue over the decisions taken at the Mercosur and Unasur summits with the fact that economic sanctions were not imposed on Paraguay seen as a relief. 

Paraguay will continue to have access to the Mercosur Structural Convergence Fund, of which it is the main beneficiary. Paraguay is assigned 48 percent of these funds, while Uruguay receives 32 percent and the remaining 20 percent goes to Argentina and Brazil.

Carlos Filizzola, former interior minister in the centre-left Lugo administration, told IPS that the ousted government would prefer that the international community does not impose sanctions on Paraguay. 

“We are not asking for sanctions, but we do want to denounce to the competent multilateral bodies that there has been a rupture of democracy,” Filizzola said.

To shore up his standing and that of the new government, Franco is seeking to strengthen political and business alliances at home. 

By selecting senator Óscar Denis as his vice-president, Franco has put the entire executive branch in the hands of his own political party, the Authentic Radical Liberal Party (PLRA).

In a communiqué, industrialists and business leaders have rejected what they view as an intervention by Mercosur countries in the internal affairs of Paraguay. Lugo’s removal, they stress, did not result in “disturbances of public order or abrogation of the rule of law.”

Economic analyst Ricardo Rodríguez Silvero said business leaders appeared to have underestimated the economic consequences, both direct and indirect, of the country’s suspension from Mercosur that will continue until the general elections due in early 2013.    

“Paraguay will have no representation on any of the bloc’s decision-making bodies, and so runs the risk of suffering negative impacts on trade, customs and diplomacy,” he said.

Lawmaker Justo Cárdenas, of the rightwing Colorado Party, told IPS that the actions of Mercosur were intended, in his view, “to marginalise Paraguay in order to incorporate Venezuela” as a full member of the bloc. 

Franco has asked Congress to approve a bill introducing personal income tax – something Lugo had requested repeatedly without success – as well as appropriation worth 480 million dollars for social assistance programmes. 

Leftwing parties and social movements that swept Lugo into office in 2008 are continuing to demonstrate in different parts of the country, protesting his summary removal from office just nine months before the next general elections.

“We want Lugo to return to his rightful place,” Filizzola told IPS.

Luis Aguayo of the National Coordinating Committee of Peasant Organisations told IPS that his groups “supports not so much Lugo as the democratic process, which cost a great many years of committed struggle and spilled so much Paraguayan blood.”

In contrast, sections supporting Franco accuse the left of deliberately creating disturbances, an argument forwarded to explain the lack of visible public support for the new government.

In Cárdenas’s view, Franco must adhere strictly to the constitution in order to govern. Negotiations are underway for a framework of basic agreements between the two traditional parties, the Colorado Party and the PLRA, a former Lugo ally.

“The Colorado Party has neither sought nor negotiated for positions in the new government, precisely because it is pursuing a return to power via the ballot box,” said Cárdenas whose party ruled Paraguay for six decades, including the 35-year dictatorship of Alfredo Stroessner (1954-1989).

Filizzola said the left was nominating candidates for the general elections, but this was separate from the ongoing struggle to restore democratic order.

Uruguayan vice president Danilo Astori. Credit: CC BY 2.5

By Marcela Valente
BUENOS AIRES, Jul 4 2012 (IPS)

By simultaneously admitting Venezuela into its fold and suspending Paraguay’s membership, Mercosur has sparked dissension within the trading bloc that threatens the future legal architecture of the Southern Common Market. 

The resolution to admit Venezuela at the Mercosur summit on Jun. 29, in the Argentine province of Mendoza, does not have the approval of Paraguay, whose parliament has not ratified full membership for the South American oil producer, as required by the bloc’s charter, the Treaty of Asunción. 

On Tuesday, Uruguay’s vice-president, Danilo Astori, called the move an instance of “institutional aggression.” He added: “It’s a major institutional blow, perhaps the most serious in 21 years (of Mercosur).”

What happened in Mendoza “struck at the heart of the Treaty of Asunción and disregarded one of its most important rules, which is that the entry of a full member must be approved by all the existing full members,” Astori told the Uruguayan newspaper ‘El Observador’. 

From now on, “anything could happen” in Mercosur because “not a single major rule remains unbroken,” he said.  

Shock waves rippled through the Uruguayan government, whose foreign minister, Luis Almagro, has expressed objections to the mode of Venezuela’s entry.  

In Brazil, Tullo Vigevani, professor of international relations at Sao Paulo State University, said “the issue is controversial and raises questions.” 

The presidents of Mercosur countries – Argentina, Brazil, Paraguay and Uruguay – accepted Venezuela as a full member at a summit meeting in 2006. But the final, formal admission of Venezuela depended on ratification by the parliaments of each country, and it was never passed by the Paraguayan Congress. 

The institutional crisis in Paraguay, triggered by the summary removal of President Fernando Lugo on Jun. 22, led the presidents of Argentina, Brazil and Uruguay to the suspension on the grounds that it violated their charter’s democracy clause. 

At virtually the same instant they formally admitted Venezuela through a resolution signed by presidents Cristina Fernández of Argentina, Dilma Rousseff of Brazil and José Mujica of Uruguay. 

Paraguay’s suspension will cease when democratic order is restored after the 2013 general elections that will allow a new government to take office. 

What will happen when Paraguay, a founding member of Mercosur, is presented with the fait accompli of Venezuelan membership? 

In Vigevani’s view, “if the Paraguayan parliament does not ratify Venezuela’s membership in future, a new problem will ensue,” and the country “could leave the bloc permanently.” 

“The most likely prospect at present is that Paraguay will not rejoin. But there may be a U-turn, since the country’s political isolation has medium- and long-term implications, and (its authorities) may wish to come to an arrangement,” he said. 

The Union of South American Nations also decided to suspend Paraguay because Lugo’s removal followed impeachment that was carried out with unseemly haste and without regard to due process. 

But, whereas there was a consensus of attitudes on Paraguay, the incorporation of Venezuela was far from unanimous. 

Three days after the Mercosur resolution, Almagro expressed doubts about the legality of the measure and described as controversial the summit’s decision-making process. 

“At the negotiating round (on Jun. 28, in a meeting of Mercosur foreign ministers prior to the presidential summit), we firmly opposed the entry of Venezuela under those circumstances,” Almagro said. 

“Everything was decided at a meeting of the presidents behind closed doors,” Almagro said on the Uruguayan radio programme, ‘ En Perspectiva’. 

In Almagro’s view, “the last word has not been spoken,” and he said he was waiting on reports from the foreign ministry’s legal department. 

Almagro also said the incorporation of Venezuela was proposed by President Rousseff. 

The responses from authorities in Brasilia and Buenos Aires were  immediate. 

Brazilian foreign policy adviser Marco Aurélio García claimed the idea of admitting Venezuela to Mercosur  “was proposed by President Mujica.”  But, this was promptly denied by Montevideo. 

“We did not exert pressure on any country because that is not President Dilma Rousseff’s style. It was an unanimous decision that reflected the political consensus,” García said. 

The Argentine foreign ministry said the presidents’ decision “was unanimous;” it was adopted “in private” after listening to the positions of the foreign ministers and legal advisers of the three countries; and their “unanimous” analysis was that the entry of Venezuela “is in strict compliance” with the bloc’s rules. 

Santiago Deluca, a lawyer and former secretary of the Mercosur Permanent Review Tribunal, said: “From the legal point of view, the effective scope of the suspension of Paraguay’s rights in relation to the entry of Venezuela is not entirely clear.” 

It was not specified whether Venezuela’s admission “is conditional on future circumstances.” However, “legislation always comes after actual events,” and “any solution” is possible in future if the parties all want it, he told IPS. 

Over and above the legality of the situation, “it is the legitimacy of this kind of interaction” that raises most doubts, Fidel Canelón, professor of international studies at the Central University of Venezuela in Caracas, told IPS. 

“This business of ‘you exit so that I can enter’ will create a furore in the region’s relations,” because “it is perceived as punishment imposed on Paraguay by Brazil and Argentina,” Canelón said. 

“Even if the issue is settled with the support of the political and economic elites in the member countries, it may nurture forces within Paraguay that act against Mercosur, increasing the instability of the group,” he warned. 

Canelón referred to Asunción’s claim that Paraguay was under attack by Argentina, Brazil and Uruguay  as in the bloody 1864-1870 War of the Triple Alliance.

“Another reading, taking into account the dissension revealed by Uruguay, is that once again the big fish are dictating to the little fish in the bloc,” he said. 

This interpretation “raises the nasty suspicion that the presidents of Argentina and Brazil may have accelerated the entry of Venezuela because of the lucrative businesses the Venezuelan government has opened up for companies” of both countries, Canelón concluded. 

* With additional reporting by Mario Osava in Rio de Janeiro and Humberto Márquez in Caracas.

A large number of people in Malawi rely on charcoal as a source of energy. / Travis Lupick/IPS

By Claire Ngozo
LILONGWE, Jun 6 2012 (IPS)

On-again, off-again… it’s the story of both Malawi’s power supply and the interconnection project that could end blackouts with power imported from neighbouring Mozambique.

Malawi’s total demand for power currently stands at 300 megawatts, but the country’s generation capacity is only 266 MW. The shortfall is projected to grow rapidly in a country where the World Bank says only eight percent of the population of 14 million has access to electricity. The Ministry of Energy estimates that the country will need 603 MW by 2015 and 829 MW by 2020.

Malawi’s hydro-electric station on the Shire, the country’s largest river, is hampered by siltation and outdated equipment, making the power supply in this Southern Africa country erratic.

Daily power cuts can last up to six hours and small and large companies alike struggle in the face of an uncertain power supply.

“I can’t wait to see the situation improve. I am putting my hope in this new deal with Mozambique,” said Judith Chilika, who runs a hair salon and a restaurant in Malawi’s capital, Lilongwe.

She told IPS her businesses have suffered greatly from frequent blackouts.

“I have had to close down both the restaurant and the salon many times due to the power blackouts. I can’t afford to run my stand-by generators for long, because fuel is expensive and there have also been shortages of diesel and petrol for some time now,” said Chilika.

Yet plenty of power is available from a dam just across the border in Mozambique. The giant Cahora-Bassa dam was constructed in 1974 and supplies electricity not just to Mozambique, but to neighbouring South Africa.

A 2008 proposal – backed by a 200 million dollar package from the World Bank – to buy power from Cahora-Bassa has faced numerous delays. Last year the plan seemed stillborn, when Malawi’s government canned it over cost concerns.

But Malawi’s new government, led by Joyce Banda – who assumed power three days after President Bingu wa Mutharika’s death from illness in April– has moved quickly to revive the project. On May 12, Banda’s government signed a memorandum of understanding with Mozambique to again move ahead with the power link.

The interconnection plan is directly in line with the Southern African Development Community’s emphasis on cooperation along shared watercourses – exemplifying cooperation for sustainable development, and advancing the SADC agenda of regional integration and poverty alleviation.

Energy-pooling is among the strategies employed in implementing the 2003 Revised Protocol on Shared Watercourses, which supports joint development, transmission, and storage of energy to achieve greater reliability, economy and equitable sharing of costs and benefits among riparian states.

“The overall objective of the protocol is to foster close and coordinated cooperation in the management, protection and utilisation of shared watercourses and to advance the SADC agenda,” Lopi told IPS.

Malawians are cautiously optimistic about news the deal is back on. “We hope we will have a more reliable power supply which will boost our industrial work and help improve Malawi’s economy and alleviate poverty in the country,” said John Kapito, executive director of the Consumer Association of Malawi, the country’s most influential consumer rights body.

Kapito said the power outages must end if the country is ever to get back on its feet economically.

“This agreement is our biggest hope,” Kapito told IPS.

But hopeful consumers and business owners will have to wait for details of the agreement to be finalised, according to Cassim Chilumpha, the country’s energy minister.

Chilumpha told Parliament this week that a technical team is yet to go to Mozambique to finalise the process. “We will try as much as possible to speed up the process so that we start benefiting from the new agreement as soon as possible,” he said.

(END)

The mighty Victoria Falls. The water sector is critical in helping build regional integration in Southern Africa. / Zukiswa Zimela/IPS

By Thabani Okwenjani
HARARE, Jun 5 2012 (IPS)

The Southern African Development Community’s protocol on shared watercourses is recognised as one of the world’s best. But sound agreements on the sustainable and equitable management of joint water resources require effective means to implement them.

Water officials from across Southern Africa are meeting in Harare, Zimbabwe, on Jun 5-6 to develop a mechanism to monitor the implementation of the regional agreement.

SADC’s 2003 Revised Protocol on Shared Watercourses stresses a basin-wide approach to managing transboundary waters, rather than an emphasis on territorial sovereignty. It spells out the objectives of sound management as including coordinated management, sustainable use, and environmental protection.

The river basin organisations that are holding their fifth meeting in Harare are charged with promoting equitable use, setting out strategies for the development of shared rivers and lakes, and developing a policy for monitoring shared watercourses.

Armed conflict over water has long been predicted; most recently the United States Office of the Director of National Intelligence said such wars would break out within the next decade. But although many parts of the region are already facing water stress, SADC expects its numerous transboundary watercourses to be the basis of closer cooperation rather than conflict.

“They say the next wars will be fought over water,” Dr Kenneth Msibi told IPS in Harare, ” but with these agreements, we are making sure that water will instead be an instrument of peace.”

Msibi, a water policy and strategy expert at the SADC Secretariat, said the water sector is critical in helping build regional integration. “Cooperation will also lead to further integration and water is an engine for development and this means a tool for poverty reduction. This means protocols for shared water are critical for regional integration.”

Msibi believes managing shared river basins in line with integrated water resource management principles – recognising that water management encompasses both social and economic goals, and should involve policy-makers, managers and users – contributes to SADC’s three key objectives: regional integration, peace and stability, and poverty reduction.

Sipho Nkambule, the chief executive officer of the Komati Basin Authority, which coordinates management of a river system that extends across South Africa, Swaziland and Mozambique, said he would use the Harare meeting as a chance to compare notes on how other river basin authorities were monitoring implementation.

He said the main challenge was explaining management of a shared river to people living along its banks.

“People are struggling to understand why they should share the resource with others,” Nkambule said. “Those upstream are not happy to be told to allow water to pass, when they want to trap it for their own needs.”

Sergio Sitoe, the Interim Executive Secretary of LIMCOM, the Limpopo Watercourse Commission, said he hoped the new monitoring tool would emphasise communication among member states sharing a river basin.

“Member states should notify each other on development projects along the basin, as notification is crucial and failure to do so may create problems downstream and might impact negatively on other members,” he said.

As an example, Sitoe mentioned a recent complaint in which the Botswana government felt their South African counterparts should have officially informed them before beginning a development in the river basin.

The LIMCOM head said that while regional agreements allowed for disputes to be taken to the SADC Tribunal, there were a number of conflicts in the region that were being discussed behind closed doors.

“It’s good that we are trying to prevent these conflicts,” Sitoe said, “and we are building trust so that everything runs smoothly.”

Officials from across the region are agreed that implementation of the 2003 Revised Protocol on Shared Watercourses will promote peace and stability in the region.

Msibi said the river basin organisation meeting – which welcomed its latest full member, the Zambezi Watercourse Commission, whose founding agreement was ratified in September last year – was meant to provide guidelines and reach a consensus on what indicators would be used and how these could be applied in each of the region’s transboundary river systems.

“We are taking input from all the stakeholders, we will discuss the tool and indicators to monitor progress,” Msibi said.

“This agreement can unlock potential for member states, and it creates an opportunity for member states to work together to beat economies of scale,” he said.

The leaders of South America’s Mercosur trade bloc decided to set up a committee to facilitate the incorporation of new members, adopt a mechanism to defend democracy in case of a coup, and ban vessels from the Malvinas/Falkland Islands from docking in member countries’ ports.

Mercosur leaders express solidarity with Argentina's historic claim to the Malvinas/Falkland Islands. Credit: Office of the Uruguayan president

At Tuesday’s summit, the presidents of Argentina, Brazil, Paraguay and Uruguay also signed a free trade agreement with Palestine, seen as mainly symbolic, and expanded the list of products from outside the bloc that will pay import tariffs.

In their speeches, the Mercosur (Southern Common Market) leaders acknowledged the contradictions and hurdles faced by the region’s largest trade bloc, while stressing the need to continue to forge ahead with the process of integration.

At the bloc’s headquarters in Montevideo, host President José Mujica met Cristina Fernández of Argentina, Dilma Rousseff of Brazil and Fernando Lugo of Paraguay, as well as Hugo Chávez of Venezuela and Rafael Correa of Ecuador, whose countries are in the process of joining as full members.

“Our path is full of contradictions and difficulties,” Mujica said. “Woe to us if the contradictions disillusion us and we abandon this project. We would soon become a leaf in the wind, in this world of colossal forces.”

The Uruguayan president emphasised that the bloc represents not only economic, but political, integration. “Without politics, there will be no Mercosur in the long run, and there will be no convergence, because this is not only an economic equation.

“Alas for us if we fail to understand that the underlying issue is a question of power, and that this question makes it necessary to move towards convergence,” he said.

Mujica also confirmed the creation of a high-level committee to analyse the admission of Venezuela and Ecuador as full members.

Venezuela, whose admission process began in 2006, is only awaiting approval by the Paraguayan Congress, where legislators opposed to the left-leaning Lugo hold a majority. For its part, Ecuador formally requested full membership on Tuesday.

Chávez said the incorporation of his country as a fifth full member has been blocked “by just five lawmakers” in Paraguay.

“These people who have been opposing (Venezuela’s admission) for five years, I don’t know if they are aware of the harm they are causing, not to Venezuela, but to everyone, to the Paraguayan people themselves,” he said. “There are only five people who don’t want it. I think that behind them there must be a very powerful hand, moving who knows what mechanisms of pressure,” he maintained.

Chávez underlined that Venezuela’s incorporation would mean “opening Mercosur to the Pacific.

“We are members of OPEC (Organisation of Petroleum Exporting Companies), we have gas and energy reserves, we have things to contribute,” he added. “We have to expedite this, spurred on by the global crisis that is threatening us.”

Lugo also referred to the case of Venezuela and the resistance put up by a handful of legislators in his country.

“This government of Paraguay is respectful of its institutions, but it is making an effort to strengthen integration. The incorporation of Ecuador and Venezuela would work in favour of our bloc,” he said.

Rousseff, meanwhile, highlighted the agreement reached at the summit “to expand the list of products included in the common foreign tariff” applied to imports from outside Mercosur, and to adopt various mechanisms to foment intra-bloc trade.

Correa, for his part, stressed the signing of the “Montevideo Protocol”, a mechanism providing for a mutual response in defence of democratic institutions in case of a coup d’etat in any of the member countries.

The summit agenda, which was to include public ceremonies, such as the signing of the agreement with Palestine – signed in private in the end – was interrupted by the tragic news of the death of Argentina’s deputy trade secretary, 33-year-old Iván Heyn. The newly appointed official was found hanged in his room in the Montevideo hotel where most of the Argentine delegation was staying. The police said his death appeared to be a suicide, but that the investigation continued.

When Fernández was notified, she was so upset that her private doctor was called to attend to her.

Malvinas/Falklands

The summit also approved a resolution to close the bloc’s ports to vessels flying the Falkland Islands flag. The islands, known as the Malvinas in Argentina, have been held by Britain since the 1830s, and were the subject of a brief war between the two countries in 1982, when Argentina sought to assert its sovereignty over them.

In a column posted on the Uruguayan president’s web site Tuesday, Mujica explained his decision to ban the boats from docking in Uruguay, arguing that his country’s foreign policy has always been based on national interests, but also on the principle of solidarity with the region.

Mujica said solidarity with Buenos Aires also benefited Montevideo. “Uruguay’s political history shows that every time relations with Argentina have soured, the economy and labour have been enormously impaired,” he wrote.

Fernández expressed her appreciation for the member countries’ decision to block boats from the Malvinas.

The Malvinas “are not just an Argentine cause, but a global cause, because (the British) are taking oil and fishing resources, and when they need more resources, whoever is the strongest will go to find them whenever and however,” she said, as Rousseff nodded.

“When they sign something involving the Malvinas, they are doing so as if the Malvinas belonged to them. There are many countries here with great natural wealth, and this wealth must be defended. Let’s be smart enough to understand that, by taking care of each other, we are taking care of ourselves,” she added.

At the end of the summit, Mujica handed over the rotating six-month presidency of the bloc to Fernández.

By IPS Correspondents
HONG KONG, Dec 16 2005 (IPS)

In a historic move, 110 developing country members of the 149-nation World Trade Organisation (WTO) have joined hands to make the Doha Development Round a reality – as a development round. The round was launched in the Qatari capital four years ago.

But the move that brings together heterogeneous groupings of developing countries with diverse interests such as the G20, G33, the least developed countries (LDCs) and the small economies does not wish to be seen as opening up a new front in the “North-South confrontation”, says Brazilian foreign minister Celso Amorim.

Brazil and India have emerged as leaders of the Group of 20 (G20) comprising 21 member countries: Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, the Philippines, South Africa, Tanzania, Thailand, Uruguay, Venezuela and Zimbabwe. The G20 led the way to bring in the rest.

The 110 countries have joined hands to end the “perpetuation of inequities in global trade” and to ensure that development remains at the centre of the ongoing Doha Development Round, says India’s commerce minister Kamal Nath.

With this in view, a ministerial meeting was held this week between all the developing country groups for the first time at the WTO.

According to a joint statement issued Friday, the ministers “exchanged views and decided to better coordinate their efforts in order to develop a common approach to issues of common interest.”

The groups recalled the pledge made four years ago at Doha to place the interests and needs of developing countries, especially the LDCs, at the heart of the round.

“They reiterated their shared interest in the development dimension of the round and their expectations for a comprehensive development outcome. They recalled that agriculture is central to development,” the joint statement says.

There was also agreement among the groups that the round must result in removal of distortions that inhibit export growth in developing countries, and on policies that ensure their sustainable socio-economic development.

The newly formed group of 110 (G110) also called upon the developed nations – particularly the European Union (EU) and the United States – to support their socio- economic development.

In particular, the group said, the developed countries should agree to the “complete elimination of export support measures by 2010 while addressing concretely the specific needs of LDCs and newly industrialising developing countries.”

The G110 also “affirmed the need for substantial reductions of trade-distorting domestic support.”

The joint statement says: “The groups recognise the importance of substantial improvements in market access for products of export interest from developing countries in developed country markets.”

It adds: “They also recognise the need to address the concerns of preference receiving countries.”

The G110 expressed support to LDC demands for duty free and quota free market access and said it recognises “the need for a concrete outcome in Hong Kong on this issue.”

Taking up a specific issue, ministers from the 110 countries stressed the need for “a firm commitment to be made at Hong Kong to address the issue of cotton ambitiously, expeditiously and specifically.”

Observers doubted, however, that the sixth WTO ministerial conference would end Sunday with any concrete decisions.

“We will have some common paper that will list the issues discussed, propose continuation of discussions in Geneva and at other places so that the Doha Development Round may be finalised, as scheduled, by the end of 2006,” a developing country delegate told IPS.

The G110 got flanking support from Anwarul K. Chowdhury, the UN envoy for Least Developed Countries, Landlocked Developing Countries and Small Island Developing States. The support was significant, even though the WTO is not a United Nations body.

Addressing media representatives Dec. 14, Chowdhury said the global trade talks should not lose sight of the fact that the outcome of the negotiations is likely to have far- reaching effects on the lives of millions of people in the LDCs.

The UN envoy pointed out that the 50 LDCs – 34 of which are in Africa – hold about 12.5 percent of world population, but their contribution to world trade hovers around just half a percent.

From the total world merchandise trade of 8.9 trillion dollars in 2004 (a trillion is a thousand billion), the share of LDCs was a meagre 0.64 percent. The situation is worse for trade in services – 0.44 percent in 2004 down from 0.49 percent in 1990.

Chowdhury pointed out that the group of LDCs was united in their demands for a binding commitment on duty free and quota free market access for all products from their countries on a secure, long-term and predictable basis.

“It is estimated that this alone, if implemented by the WTO, could generate welfare gains up to 8 billion dollars and export gains of up to 6.4 billion dollars,” he said.

Chowdhury supported the proposal of African cotton producers who have demanded immediate elimination of export subsidies on cotton.

A World Bank study has shown that removing subsidies would expand cotton exports from sub-Saharan Africa by 75 percent. The developing countries’ share of global cotton exports would rise from the current 56 percent to 85 percent by 2015.

Excerpt:

By Emad Mekay
HONG KONG, Dec 15 2005 (IPS)

Once downtrodden at international meetings, developing countries, led by India and Brazil, are showing renewed assertiveness in the face of pressure from industrialised nations that are lobbying to open new markets at a global trade meeting here.

An increasing number of poor nations have been banding together, forming alliances and groups to challenge the position of rich nations – mainly the United States and European Union – at the Sixth Ministerial Meeting of the World Trade Organisation (WTO) now underway in Hong Kong.

On Wednesday, five leaders of small alliances of developing countries met to form a larger bloc to lobby on key issues like agriculture and cotton. The groups are the G20, G33, Africa Group, the Least Developed Countries Group and the Africa, Caribbean and Pacific Group.

Brazil’s Minister of External Relations Celso Amorim, one of the engines behind the new solidarity, described the event as unprecedented. “This is the first time we discussed our different issues among ourselves and not waited for others to do it with us,” he said.

Central and Western African nations have also vowed to defend their common interests as one bloc. Chief among their concerns is the fall in cotton prices because of subsidies to cotton farmers by the United States.

Nine developing countries, including India, Brazil and South Africa, also announced a new negotiating group on non-agricultural market access (NAMA). Other countries in the alliance include Egypt, Argentina, Venezuela, the Philippines and Namibia.

But perhaps more impressive is a meeting for developing countries on Thursday aimed at creating a potential umbrella alliance of 110 of the WTO’s 149 members, to be named the G110. If the union comes to life, it will be the largest group of developing nations in trade talks.

“If it comes together, this new alliance could mark a radical shake-up at the WTO,” said Adriano Camplina Soares of the U.S.-based ActionAid. “It will be much harder for rich countries to push through their demands in these talks if poor countries unite and champion the rights of poor people.”

Many say that the new groups will serve as a long-term platform for poor nations to resist future attempts by more powerful countries to pass rules that primarily benefit international corporations, mostly based in industrialised nations.

At the current WTO round of talks, developing countries are demanding the elimination of tariffs to obtain effective access to developed countries’ markets, especially for traditional industries like textiles, clothing, leather products, footwear and a range of other medium technology products.

Rich nations, on the other hand, have been pressuring developing nations hard to open their markets for goods and services. So far, they have failed to get their way.

“Solidarity and assertiveness amongst developing countries is vital to achieve a pro-development outcome and resist rich country attempts to stitch up a deal that serves only their interests,” said Phil Bloomer of Oxfam International.

This assertiveness among developing nations over the past three days of the meetings represents a much more proactive strategy by the countries themselves.

Regional economic powers Brazil and India have both said that they are willing to drop some of their barriers against goods from poorer nations and grant them quota-free and duty-free access in a programme that would parallel offers by rich nations.

Both have also said they will offer technical expertise and assistance to the poorest nations, a position that was noted by the U.S. Trade Representative Rob Portman as an positive change.

“I actually see that some of the responsibility being taken was perhaps previously shouldered more by the developed countries,” Portman told reporters.

The newfound confidence among developing nations was noticeable here in other forms, as some nations openly heaped scorn on liberalisation proposals, seen as one-sided, that the United States and the European Union have put on the table.

India’s Minister of Commerce and Industry Kamal Nath, a prominent figure at the meetings, ridiculed a proposal by rich nations on trade in non-agricultural products that proposes a 75 percent cut in tariffs by developing nations but only 25 percent for developed countries.

“Surely, there is a mistake somewhere,” he said. “It cannot be that preposterous.”

Nath also mocked statements by EU Trade Commissioner Peter Mandelseon before the start of the meetings, noting that the EU came to Hong Kong with no offer on agriculture apart from a proposed 45 percent cut in subsidies that was publicised earlier this month.

Nath, joined by Amorim of Brazil, told reporters that this position was a non-starter.

“If you’ve come with empty pockets, you cannot go shopping,” he said, drawing laughter from the audience.

The upbeat mood among developing countries was also evident in some of the novel ideas they proposed.

India has requested that the WTO provide more protections for ancient intellectual property rights. The country has unveiled a database with more than 30 million pages of texts on herbal medicine, yoga and other areas it argues should be granted protections similar to those offered to Western companies.

India went on the offensive, asking the WTO to come up with a system to limit the ability of global corporations to patent a nation’s centuries-old knowledge.

But regardless of the many forms the new solidarity among poor nations has taken, officials from developing nations insist that their unity is fueled by one factor: the unreasonable demands from industrialised countries.

“All of us have been concerned there has not been a movement in this round of negotiations,” Angela Didiza, minister of agriculture in South Africa, a leading member of the new alliance, told IPS. “Our people are actually suffering that’s why we will use our strength during this processàThis issue binds us. There’s a common interest there.”

Asked by IPS what he sees as the glue holding developing countries together, Amorim of Brazil said: “We have a just cause”.

Excerpt:

By IPS Correspondents
MEXICO CITY, Dec 12 2005 (IPS)

A study sponsored by the regional United Nations agency ECLAC suggests that anti-globalisation and rural activists are wrong to blame NAFTA for most of the ills that afflict the Mexican countryside.

NAFTA (the North American Free Trade Agreement, made up of Canada, Mexico and the United States) has had no significant quantitative impact on the rural sector in Mexico, declared Braulio Serna, head of the agricultural development unit in the Mexican office of ECLAC (Economic Commission for Latin America and the Caribbean).

After taking a close look at the evolution of agriculture in this country, where poverty and low productivity levels plague a large proportion of its 20 million small farmers, the expert claims that those who point to free trade as a determining factor in its performance have a biased vision.

Serna’s position clashes head-on with that of Latin American movements calling for alternatives to the present form of globalisation, which see Mexico’s rural crisis as a clear illustration of the negative effects that other countries can expect if they go ahead with trade treaties like the Free Trade Area of the Americas, promoted by the United States.

“There is an ideological bias to the debate” that prevents the real facts from being seen, Serna indicated when asked by IPS about positions that run counter to his thesis.

The author of a study entitled “México: crecimiento agropecuario, capital humano y gestión de riesgo” (“Mexico: agricultural and livestock growth, human capital, and risk management”), sponsored and published this month by ECLAC, Serna asserts that free trade is not a factor that has originated or accentuated rural poverty.

However, it is a recorded fact that unemployment among peasant farmers has increased by more than 20 percent in the last 10 years, wages in the agricultural sector have fallen by 10 percent, and poverty has not been significantly reduced. Furthermore, the rural exodus has continued, and the productivity of small farmers remains on a downward spiral

On the other hand, in the course of a decade the rate of growth of the rural gross domestic product rose to an annual average of two percent, a higher rate than was recorded for the 10 years before the start of the study, while livestock and poultry production have progressed significantly and exports have grown steadily.

Today Mexico, population 104 million, exports 105 agricultural products compared to the 68 products it exported in the early 1990s. This growth has consolidated its position as an indispensable supplier for the United States’ fruit and vegetables markets. According to Serna, the problems in the rural areas of Mexico have nothing to do with free trade but are caused instead by global and national economic crises, climate factors, poor training, inconsistent public policies and low international prices of several agricultural products.

When asked why so many groups insist that NAFTA, which was launched in 1994, is the prime culprit of rural poverty and neglect, Serna replied that this point of view arises from “incomplete analyses.”

The Permanent Agrarian Council, the National Union of Autonomous Regional Peasants’ Organisations, the Network for Action against Free Trade and the leftwing Democratic Revolutionary Party – which hopes to win the presidency next year – have joined forces to call for the renegotiation of NAFTA because they feel it is sounding the death knell for small farmers.

“It has been fully proven that free trade has harmed small farmers more than any other factor,” Héctor de la Cueva, a spokesman for the Network for Action against Free Trade, told IPS.

But Serna suggested that this kind of statement needs re-thinking.

“You have to look deeper to find the origins of, and solutions to, rural problems,” and this is true not only for Mexico but for all those countries where free trade is blamed for a multitude of ills, he said.

Agriculture and stock-raising in the rural areas of Mexico have been adversely affected by the historical decline in international agricultural prices, which began in the 1970s and continued into the 1990s, the ECLAC study points out.

Another important factor was the 1994-1995 economic crisis in Mexico, which drove down productivity and wiped out what little measure of international competitiveness Mexican agriculture previously enjoyed. A number of severe droughts and floods must be added to these elements.

In addition to this complex scenario, although public policies to support the agricultural sector have been applied for several decades, they have not succeeded in making it uniformly and sustainably competitive, and its human resources are poorly educated and badly trained.

NAFTA is one more element in the equation, but it is not the main factor when it comes to assessing the present situation faced by the rural sector, the study says.

Serna acknowledged that, in spite of Mexico’s steps forward in agricultural productivity, social inequality and poverty continue to prevail in the sector.

Out of 31 million hectares cultivated each year in Mexico, the growing production of tomatoes, asparagus, pumpkins, broccoli, cucumbers, lemons, mangoes and watermelons is concentrated in less than one million hectares. Exports of these products have increased by between 45 and 250 percent in the last 10 years, according to official statistics.

These figures show that three-quarters of Mexico’s farms involve subsistence agriculture, in a country where 75 percent of the poor live in rural areas.

Furthermore, between 35 and 40 percent of the agricultural labour force is essentially devoted to growing maize, a traditional crop of great importance in the Mexican diet, but which faces tremendous competition from the United States.

The United States is the world’s biggest exporter of maize, and uses biotechnology to boost productivity.

The ECLAC study recommends investing heavily in education and training for small farmers, along with better planning and risk management, as the best way of overcoming the problems in rural areas.

Greater investment in education and training, combined with attention to the quality of those services, would undoubtedly increase productivity, the ability to participate in value added production chains, and the incomes of farmers, says the study.

Another task which might impact favourably on the welfare of the rural poor is to increase the emphasis on risk management in agricultural policy-making, especially for producers with few assets, it adds.

Excerpt:

By Mario Osava
RIO DE JANEIRO, Dec 12 2005 (IPS)

The greatest feat of the Group of 20 (G20) developing nations is to have survived as a key actor in the World Trade Organisation (WTO) multilateral trade negotiations, despite its heterogeneous nature and the diverse interests of its members.

Among the members of the G20, a coalition of countries pushing for a reduction of trade-distorting farm subsidies and for greater access to industrialised markets, “rules of conduct” have taken shape.

These rules allow the group to reach consensus agreements, respecting the limitations of each country, reconciling diverse interests and recognising that “it is better to reach agreement on less ambitious proposals than to tear the group apart” and lose bargaining power, said André Nassar, executive director of the Institute for International Trade Negotiations Studies (ICONE).

The G20, which emerged in August 2003, is currently made up of 21 countries: Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, the Philippines, South Africa, Tanzania, Thailand, Uruguay, Venezuela and Zimbabwe.

As exporting nations, they are demanding that the United States, the European Union and Japan put an end to their farm export subsidies and domestic supports that distort trade.

But divisions in the bloc begin to appear when it comes to presenting and negotiating specific proposals.

Some of the interests are kept quiet and only appear when the group is attempting to adopt an initiative. “It’s easy to see the ‘offensive’ interests,” that is to say the demands for trade liberalisation and opposition to subsidies and other barriers like high import tariffs, but the “defensive” interests only show up at the last minute, said Nassar.

China, for example, does not want to make any commitments that in the future would keep it from adopting price support and farm income policies. Although it does not now shell out subsidies, it knows it will have to do so in the future and is seeking to reserve that option for itself, said the expert.

India, for its part, forced the G20 to break an old rule according to which, in an eventual agreement, developing countries would lower their tariffs by two-thirds of the reduction set for the industrialised powers.

For that “super-protectionist” country – which charges, for example, the world’s highest import duties on vegetable oils: up to 80 percent – the phasing out of tariffs would be very difficult, even if it would have to reduce them by a smaller proportion than the industrialised countries. It is not the same to lower tariffs from six to three percent as from 60 to 40 percent, he pointed out.

Thus, countries that have taken an “offensive” stance in agriculture like Argentina, Brazil and Chile have had to “renounce their ambitions” in the face of the “defensive” limitations and interests of other G20 nations that prefer the possibility of reducing tariffs by a proportion of less than two-thirds. That pragmatism “works politically,” Nassar acknowledged.

Brazil is not only one of the group’s largest members, but is also a leader due to its broad interests as a major exporter of a number of products, and because it is one of the “offensive” countries, he noted.

But in the chess game of the negotiations, countries do not completely give up their specific individual aspirations, and at times form undeclared temporary alliances. Brazil knows that some day the United States will pressure India to reduce its protectionism, and that hence it will not have to do so itself within the G20, which would endanger the bloc’s unity, he explained.

ICONE is a Sao Paulo think tank created by Brazilian business associations in 2003 to assist the country’s trade negotiators, especially in the area of agribusiness. Brazil wants to see an end to farm subsidies and is pressing for greater access to markets in both the industrialised North and the developing South.

A study by ICONE researcher Mario Jales shows that while Brazilian farm exports have historically gone to industrialised nations, the country’s exports to the developing world have grown significantly, to half of the total value of exports last year.

For that reason Brazil is keen on ensuring freer access to developed as well as developing nations. But it will have a hard time gaining market access for its commodities, because a large part of its farm exports are “sensitive” products like sugar, beef, fuel alcohol (ethanol) and orange juice, which pay heavy tariffs.

No one expects an agreement to be reached at the sixth WTO ministerial conference in Hong Kong, running Dec. 13-18, due to the difficulties in overcoming the differences in agricultural trade, especially between the G20 and the EU.

But in Nassar’s view, certain concepts will be hammered out and the meeting will serve as a “rehearsal” that will pave the way for more concrete negotiations next year.

Representatives of civil society in Brazil, however, do not want any agreement to be reached, because in the current scenario in the WTO, an accord would only be made possible by concessions from poor countries, which would thus sacrifice their chances of development.

The G20 will play “a central role” in Hong Kong, but its problem is that it is focusing all of its efforts on opening up markets for agribusiness, at the expense of the rights of countries to “protect rural lifestyles and family farming,” said Fatima Melo of the Brazilian Network for the Integration of the Peoples, which groups non-governmental organisations and social movements.

Her fear is that in exchange for mere “crumbs” in the reduction of European farm subsidies, Brazil will make “unacceptable” concessions, opening up essential public services like water and power to transnational corporations.

That risk exists because of an alliance of forces in Brazil that favours export agribusiness at the expense of family farms, said Melo.

India, she added, has taken a better position, one that is more sensitive to the need to defend poor countries’ chances for development.

ICONE, however, denies that such a division exists, arguing that family agriculture forms part of agribusiness and accounts for the largest share of some leading Brazilian export products, like beef and tobacco, and thus has a direct interest in gaining access to markets.

Debate is “healthy”, but there is a lot of “ideology” involved in the belief that family agriculture is in need of protection, said Nassar. The risk that imports will threaten Brazil’s agricultural development “is very low,” while reducing international trade distortions would favour both large and small farmers, he maintained.

According to Nassar, efforts should now be concentrated on the country’s “offensive interests” in the trade negotiations, and social movements should press for public policies aimed at promoting the development of family farming, instead of depending on protectionist tariffs.

Excerpt:

By Diana Cariboni
MONTEVIDEO, Dec 10 2005 (IPS)

Many of the hurdles facing South America’s Mercosur trade bloc in its attempts to deepen the integration process have to do with the gap between its ambitious aims and the institutions and other instruments that have been put in place to achieve those goals.

When it was founded in 1991, Mercosur (Southern Common Market, made up of Argentina, Brazil, Paraguay and Uruguay) “established the objective of strengthening economic integration, intraregional trade and development,” said professor of international trade Marcel Vaillant.

But another aim was to become an instrument for improving the insertion of its members on the international scene, he added in an interview with IPS.

Mercosur is attempting to build a customs union – a rare form of integration that involves the duty-free circulation of goods among member countries and a common external tariff for imports from outside the bloc.

“There are 220 trade agreements registered in the World Trade Organisation (WTO), and only 10 of them are customs unions,” said Vaillant, with the economics department in the faculty of social sciences at the University of the Republic of Uruguay.

“It’s like building a new nation in the sphere of trade and it requires a deep level of commitment and harmonisation of policies,” he added.

But Mercosur has other ambitious goals as well: a structural convergence fund to assist the smallest members of the bloc and reduce the asymmetries, the regulations for which were approved Friday at the 29th Mercosur summit in Montevideo, or common environmental and animal health policies.

“There are many policies that don’t work unless they are regional,” such as the defence of a shared natural resource like the Guarani Aquifer, or measures to fight foot-and-mouth disease, for which specific instruments are needed, said the analyst.

The bloc’s technical secretariat has just four advisers. “The half-yearly reports that the technical advisers have to submit” are confidential, the information does not circulate, and in many cases they end up unread at the bottom of a drawer in one of the member nation’s foreign ministries,” said a Mercosur source who preferred not to give his name.

There are very few high-level meetings that are attended by all of the relevant senior officials from the various member countries, he told IPS.

When Mercosur was first conceived of, the countries tried not to create new structures or accentuate the existing problems of credibility that had arisen from a long tradition of failed attempts at integration in Latin America.

“Questions of fiscal austerity also weighed in, which did not benefit the creation of new institutions,” said Vaillant.

This approach worked at first, when the focus was on eliminating reciprocal trade barriers. But as the integration process moved forward and the members worked on building common policies, the need for new institutions became more and more obvious.

“If you want to pound in a nail and you have a hammer, great. But if you then want to use screws and build a wall, and the only tool you have is a hammer, things aren’t going to work,” he said.

However, it’s not a question of creating more red tape, he stressed. Mercosur is involved in negotiations in more than 200 different areas, and specialised departments already operate in the member nations’ foreign ministries.

“It’s about changing the bureaucracy, with an intergovernmental, permanent and specialised structure that is non-supranational in character,” said Vaillant.

In addition, he said, the six-month rotating presidency should be lengthened, and certain functions should be delegated to common structures, he added.

The Mercosur parliament, approved by the presidents meeting in Friday’s summit, could be beneficial, because it implies diversifying the actors involved in the process and incorporating new visions, as well as encouraging political parties to take a greater interest in questions of integration.

Meanwhile, the ideological affinity of the current left-leaning governments of Argentina, Brazil and Uruguay, which at one point gave rise to speculation that it could help overcome obstacles to integration, has not brought about significant changes.

The problems faced by the countries with respect to the integration process are structural and permanent, such as national interests, said Vaillant, who believes the difficulties have neither gotten worse nor better.

Tensions have run high among the “progressive” members of the bloc. In his address on Friday, Uruguayan President Tabaré Vázquez complained about “arrangements” agreed on by the two biggest partners, Argentina and Brazil.

But the business community is not opposed to integration, said the analyst. “The private sector has been taking advantage of the opportunities that Mercosur continues to offer. Relations continue to exist, business continues to be done, and if the option of doing away with Mercosur were brought up today, in Uruguay there would be a huge backlash,” he added.

Trade between Argentina and Brazil grew significantly over the past few years, and even a small country like Uruguay has experienced “steady investment and structural changes in terms of logistics, improvements of the port system, and highway infrastructure” that has been key to both extra-bloc trade and commerce among the bloc’s partners, said Vaillant.

He played down the notion that the bloc is in the midst of an explosive expansion, with the incorporation of new members, like Venezuela, whose request to become a full member was formally accepted at Friday’s summit.

Chile and Bolivia became the bloc’s first two associate members as far back as 1996 and 1997, and the Mercosur negotiations with South America’s other big trade bloc, the Andean community, had already begun in the second half of the 1990s, although “they crystallized in the past few years,” he noted.

The neogiations with the Andean Community – comprised of Bolivia, Colombia, Ecuador, Peru and Venezuela – have been complex.

Vaillant pointed out that it takes a long time to create a free trade zone, and that the aim now is to achieve common preferential tariffs between the members of the customs union and third party countries, “which was not a goal in the past.”

“Today Mercosur has common accords with Chile and Bolivia (practically a free trade zone), and a relatively lengthy convergence programme for bringing about a free trade zone with the rest of South America within 15 to 18 years,” he said.

With the launch of the South American Community of Nations at a 2004 summit in Peru, Mercosur took on an even higher profile as “a big international relations operation,” said the analyst.

The bloc is also involved in negotiations with developing nations like India, Egypt, Morocco and South Africa, as well as countries “with little or no economic significance,” while it faces major hurdles in reaching accords with industrial powers like the United States or the European Union, with which Mercosur has been involved in negotiations for 10 years.

If the number of free trade accords signed by Mercosur is compared to the list of agreements negotiated by others in the region, like Chile or Mexico, the bloc would appear to be lagging.

The comparative advantages of the Mercosur countries (especially Brazil) “are concentrated in the very sectors that are targeted by the protectionist policies of the industrialised nations,” Vaillant observed.

For the EU, a free trade deal with Chile or Mexico does not involve significant internal adjustments. But an agreement with Mercosur “is problematic, not only because of questions of scale or size, but because the South American bloc’s comparative advantages are in areas that coincide with most of the European bloc’s protectionist policies,” he underscored.

That is seen not only in agribusiness and livestock breeding, but also in the case of steel and other industries, he said.

In Vaillant’s view, trade between South America or Mercosur and the EU is “19th century” and “almost caricaturistic”: raw materials with no value added in exchange for manufactured products with a high technological content.

Although there are tensions in the same sectors, South American goods exported to the United States have a greater technological content overall.

Excerpt:

By IPS Correspondents
BRUSSELS, Dec 8 2005 (IPS)

The African, Caribbean and Pacific group of countries need proof that development truly is at the forefront of negotiators’ minds at the World Trade Organisation talks in Hong Kong next week, says a leading European parliamentarian.

“They want actions to match the fine language on sustainable development, governance and social cohesion,” Glenys Kinnock, British Socialist member of the European Parliament (MEP) and chair of the Parliament’s delegation to the ACP-EU Joint Parliamentary Assembly told IPS in an interview. “We face a watershed in Europe’s relationship with the ACP.”

Kinnock said the group of 78 African, Caribbean and Pacific (ACP) countries are feeling “increasingly marginalised and neglected”, and in Hong Kong “they will argue for better market access and for a recognition that their share of international trade is so small, in most cases, as to be irrelevant.”

Kinnock says the ACP countries share a “crucial and common concern” arising from their heavy dependence on European markets for the export of their agricultural commodities.

“They are suffering from the effects of falling prices, from their specialisation in exports of low value, and most of all, from the erosion of their preferential market access to Europe,” she said.

Trade ministers from 148 member countries of the WTO will meet in Hong Kong Dec. 13-18 to attempt agreement on the stalled Doha Development Round of trade talks, named after Doha in Qatar where the talks were launched four years back.

The negotiations are aimed at freeing up trade in a range of sectors from agriculture to manufactured goods and services. Developed nations want developing countries to open up their markets to industrial goods and services in exchange for any concessions on agriculture.

Agricultural tariffs and subsidies are the main obstacles to a new international trade agreement. EU tariffs on agricultural produce from developing countries raise the price of those products. At the same time, subsidies handed out to European farmers artificially lower the price of European agriculture produce. This makes most agricultural goods from developing countries uncompetitive.

As a self-confessed “veteran” of the Doha talks, and then of further talks that broke down in Seattle in the United States and then in Cancun in Mexico, Kinnock says she has a sense of “déjà vu” as she prepares for the meeting.

“Tensions are beginning to grow, just as levels of ambition are lowered,” she said. “The situation is clearly grim. How now can we avoid the kind of spectacular and shambolic collapse we have already seen twice before? If there is no progress, despair and hopelessness will set in.”

Kinnock says she will spend a great deal of time between her ACP contacts and European negotiators.. She said ACP countries now have an “unprecedented international identity, thanks to their prominent role at the WTO and in the group of 90 countries, which comprises the ACP nations, the African Union, and the least developed countries (LDCs).”

This group gained visibility when it defended the positions of the poorest countries during the failed WTO ministerial conference in Cancun, Mexico, in September 2003.

“They are well aware that the multilateral trading system is failing to make the essential contribution to their efforts to eradicate poverty in sub-Saharan Africa, as well as in the other marginalised countries in the Caribbean and the Pacific,” Kinnock said. “They would have wished that preferences could have been maintained until all domestic and export subsidies that so seriously affect their commodities were removed.”

Kinnock says recent WTO adjudications on sugar and bananas indicate the difficulties for ACP countries.

European Union (EU) agriculture ministers have agreed a 36 percent cut in the price of imported sugar over a four-year period starting July 2007. Kinnock says this “draconian” arrangement will threaten hundreds of thousands of livelihoods in the Caribbean..

“The adjustment is simply impossible for them, although they are making efforts to modernise, restructure and diversify. In the Caribbean alone, the losses are expected to be more than 130 million euros (154 million dollars),” Kinnock said.

“The sugar states are not supplicants – they are part of a partnership which is a legally binding arrangement. They naturally resent the fact that European beet farmers, drinks manufacturers and refiners are protected,” she added.

Last month Guyanese President Bharrat Jagdeo said “the agreement amounts to a betrayal which proves that the EU cannot be trusted.”

Kinnock says bananas have provided a “further test of our seriousness about honouring our mandate” on the Doha Development Round.

Under its new banana regime, Kinnock says Caribbean banana-exporting countries will lose the “predictability and stability” essential for production and shipping of fruit.

Ultimately, Kinnock says negotiators must ensure that the WTO Hong Kong talks have development and poverty reduction at their centre. “In the year of Make Poverty History, we should be ensuring that for so many developing countries we don’t make poverty the future.”

Excerpt:

By Dario Montero
MONTEVIDEO, Dec 8 2005 (IPS)

Venezuela’s admission to South America’s Mercosur trade bloc – which is not as imminent as was previously announced – is backed by economic sectors keen on gaining access to oil under preferential terms.

But certain doubts are raised by questions like the harmonisation of tariffs and Venezuelan President Hugo Chávez’s fiery anti-U.S. rhetoric.

Mercosur (Southern Common Market), made up of Argentina, Brazil, Paraguay and Uruguay, will formally invite Venezuela to become the fifth full member of the bloc at Friday’s summit meeting in Montevideo, the Uruguayan capital, although lengthy negotiations lie ahead before the agreement is finalised.

Not even Chile, the bloc’s oldest associate member – a status it was granted in 1996, a year before Bolivia became the second associate member – has attempted to become a full partner, because to do so it would have to bring its foreign tariffs into line with those of the bloc. (Chile has a foreign tariff of six percent, compared to the Mercosur common external tariff of 35 percent).

The differences with respect to trade questions remain in place despite the ideological affinity between the centre-left Chilean government and the left-leaning administrations currently ruling Argentina, Brazil and Uruguay.

But firebrand Chávez came knocking on the Mercosur’s door with a suitcase full of petrodollars that looked tempting to highly indebted economies, and a generous offer to finance purchases of increasingly scarce oil and natural gas, in exchange for abundant agricultural products needed to reach his dream of food sovereignty (the primacy of people’s and community’s rights to food and food production, over trade concerns) for Venezuela.

But the road to full membership in Mercosur is long and complicated. Before Venezuela becomes the fifth partner, it will have to accept the bloc’s statutes, rules and regulations, fulfill a series of tariff requirements, and ratify Mercosur agreements – a process that is supposed to take six months to a year.

Presidents Néstor Kirchner of Argentina, Luiz Inácio Lula da Silva of Brazil, Nicanor Duarte of Paraguay and Tabaré Vázquez of Uruguay will merely be extending a “political welcome” to Chávez to join the Mercosur bloc, which was founded by the Asunción Treaty in 1991.

That will mark the start of a period of the fulfillment of requisites for Caracas to have a vote in the bloc rather than simply a voice (as an associate member), Nelson Fernández, assistant director of integration matters and Mercosur in the Uruguayan Foreign Ministry, told IPS.

He said that although it is possible that the process will take two or three years, he doubts that it will stretch out as long as some observers expect.

He added, however, that the formal acceptance of Venezuela is an important step in the integration between that country and Mercosur, which he said have complementary economies.

The first question to be dealt with at the Friday summit will be the approval of the document creating the Mercosur Parliament. After that will come the complex negotiations for Venezuela to sign the Mercosur protocols, adopt the common external tariff, assume the bloc’s agreements with third party countries, and accept the bloc’s negotiations with third parties, like the ongoing talks with the European Union.

The Treaty of Asunción states that any member of the Latin American Integration Association (ALADI) can join Mercosur if all four full partners approve the request. Venezuela formally filed its application in August.

“It is a very atypical admission process in comparison with the experiences of Latin American integration up to now,” said Uruguayan expert in international relations Romeo Pérez.

That is because the aim is to resolve questions of tariff harmonisation and trade and economic compatibility in just six months to a year between a new partner and a bloc that is already nearly 15 years old, he told IPS.

Pérez, a political science professor at the University of the Republic, also warned that by opening up its market to the Mercosur free trade zone, Venezuela will be flooded by agribusiness products from Argentina and Brazil, two of the world’s leading exporters of agricultural commodities.

He also underscored the impact that Venezuela’s admission will have on “the nature of Mercosur, which will move in the direction of becoming a political unit with little economic and commercial discipline.”

“It will become an association of those who are opposed to the United States,” especially in trade matters, said Pérez.

He pointed to what has already occurred in the negotiations for the creation of a Free Trade Area of the Americas (FTAA), particularly at the early November Summit of the Americas in Argentina, when the four Mercosur members and Venezuela joined together to oppose the renewal of the stalled FTAA talks.

But the analyst also noted, with a certain amount of pessimism, that Venezuela’s actual admission “will depend on the results achieved in a long, arduous negotiation process.”

A completely different view is held, although for different reasons, by Fernández and the director-general of the Andean Community trade bloc, Héctor Maldonado.

Venezuela’s application to join Mercosur is seen by the Andean Community – made up of Bolivia, Colombia, Ecuador, Peru and Venezuela itself – as “an extremely positive development for the construction of the South American Community of Nations,” above and beyond the fact that “we still have to analyse Venezuela’s proposal to become a full member,” said Maldonado.

The embryonic South American Community was launched at the third South American Summit in December 2004 in Lima, Peru.

“We are optimistic with respect to this process,” because Caracas’ intention of joining Mercosur will help strengthen South American unity, Maldonado told IPS by telephone from the headquarters of the Andean bloc’s General Secretariat in Lima

Although it is not yet clear exactly what the process of admission of an Andean Community member into Mercosur will look like, the Andean bloc “has been extremely flexible” when a member negotiates agreements with third countries or blocs on its own, he commented.

Maldonado recalled that in its December 2004 summit meeting in Quito, the Andean Community adopted article 598, which expressly authorises the partners to engage in free trade negotiations outside of the bloc, as Colombia, Ecuador and Peru are currently doing with the United States.

Maldonado also confirmed that Venezuela had emphatically assured its partners that it had no plans to abandon the Andean Community, the oldest trade bloc in the region (originally known as the Andean Pact).

At any rate, he said, significant trade compatibility problems must be cleared up first, like the fact that the Andean Community has a four-tier external tariff structure of five, 10, 15 and 20 percent, while Mercosur has a 35 percent tariff applicable to imports from outside of the free trade zone.

This is just one of the problems that must be resolved before Venezuela can be admitted to Mercosur, he stressed.

Pérez was referring to these and other touchy aspects when expressing his pessimism with respect to the future of the Mercosur-Venezuela partnership. “This is a full membership that is based on fuzzy legal foundations,” he said.

“It is not good for the bloc to move away from its current economic and trade profile,” undermining long-term accords, to seek an alliance with Caracas only in response to immediate needs, “like petrodollars to alleviate the public debt, in Argentina’s case, or in search of energy security, in the case of Brazil and Uruguay,” he said.

Nor is everyone in the private sector eager to see Venezuela join Mercosur. Agricultural producers in Venezuela, for example, see their powerful competitors to the south as a serious threat to farmers in Venezuela. The country’s agricultural chambers have already called for compensatory measures, but analysts assume these would fall far short.

The president of the Venezuelan livestock association, Genaro Méndez, pointed out that “it costs 18 cents of a dollar to produce a litre of milk in one of the Mercosur countries compared to 35 cents in Venezuela. At present we cannot compete.”

There are also actors behind the scenes ready to take the stage to throw new wrenches in the gears, because the proposed integration between Caracas, Brasilia and Buenos Aires has caused nervousness not only within the region but outside of it as well.

Excerpt:

By Sanjay Suri
LONDON, Dec 3 2005 (IPS)

Small island states have learnt to fear more than a tsunami. They are preparing themselves for being swamped by a tidal wave of devastating imports if world trade ministers cannot come to an agreement that protects their interests.

Small can be really small. Not all are quite like Tuvalu, with a population of 11,000 or so. You have a relatively large nation by way of Maldives with a population of about 350,000. And there are many more such giants relative to tiny Tuvalu, with a population running into a few hundred thousand.

They are a few people, but in quite a few countries, though. And they fear they will be forgotten when the world talks trade agreements, and that agreements once made will swamp them, and no one else in the world will notice.

The fears of small states hit the headlines after the tsunami at the end of December last year. Those concerns that these island countries could be simply swamped by the sea dominated an international meeting on small island states held in Mauritius early this year.

That meeting had sought to take forward the 1994 Barbados programme of action for the sustainable development of small island developing states (SIDS). No one seemed to have taken much notice of the Barbados agreement until the tsunami came along.

”My country is like a can of tuna fish,” Maldivian foreign minister Fathulla Jameel had said, ”because it comes with an expiry date.” Now that fears of another tsunami have receded, countries like the Maldives are beginning to fear cans of fish packed in Western countries sold cheaper than production costs in developing countries because of both domestic production subsidies and export subsidies offered by rich governments.

Few of these small countries have an effective voice at the Commonwealth, and many are not sending any representatives there at all. The Commonwealth, a grouping of 53 countries that were once a part of the British Empire, is now stepping up to speak for them at the trade ministers meeting in Hong Kong later this month.

”The Commonwealth will not be at the table at the WTO (World Trade Organisation) meeting,” Winston Cox from the Commonwealth told IPS. ”But we will provide assistance and expertise for member countries so that they are not at a disadvantage at the table.”

Cox will be particularly well placed to strengthen the case of small island states. He is deputy secretary-general in charge of WTO issues at the Commonwealth, he is from Barbados, a small island state with a population of 280,000, and he was formerly director at the World Bank.

”A major concern is going to be to ensure special and differential treatment for small and vulnerable countries,” he said. ”They will be looking for better market access, looking for recognition that their size of the international trade is so small that they cannot have any distorting effect on world trade at all.”

The small states, and those representing them, will seek to make sure, he said, that ”they are not pushed into actions that will destroy their economies.”

Many of these countries have just one commodity to sell, and when that is hit, the national economy faces ruin. Such dangers have emerged starkly with the new risks to banana and sugar exports from many of these countries.

”The economy of Dominica (pop. 69,000) has been devastated because of the challenge to the EU (European Union) banana policy,” Cox said. An EU decision to reduce preferential access to bananas from African, Caribbean and Pacific (ACP) nations following a WTO ruling has hit many of these countries hard.

”Many countries exporting sugar to the EU will see a decline in the price of the sugar they export as a result of reforms of the EU sugar policy,” Cox said. ”EU farmers are getting a completely different level of compensation through these reforms than the farmers in these small countries.”

Many of these countries face threats to services too.

The Commonwealth is looking to support financial services offered by small countries like St. Kitts and Nevis (pop. 39,000). The Organisation for Economic Cooperation and Development (OECD), a grouping of 30 rich countries, has been pushing for a crackdown on services offered by many of these countries, which it considers tax havens and centres for money laundering.

”These countries would like to be able to provide services to the rest of the world,” Cox said. ”Most of these economies have entered into double taxation treaties with other jurisdictions, which legitimises tax behaviour between two countries.”

Among the less noticed campaigns at Hong Kong this month will be the one that seeks to show that lack of size matters.

Excerpt:

By Sanjay Suri
VALLETTA, Malta, Nov 24 2005 (IPS)

In a bold new move, business leaders from Commonwealth countries have proposed a free trade area of their own if the Hong Kong summit next month fails to deliver a trade agreement.

In a bold new move, business leaders from Commonwealth countries have proposed a free trade area of their own if the Hong Kong summit next month fails to deliver a trade agreement.

The Commonwealth Business Forum said in a resolution Thursday that ”countries that are willing should explore the possibility of establishing a Commonwealth preferential or free trade area.”

This would be ”particularly important if the Doha round of trade negotiations is not successful,” the resolution said.

The resolution has taken on considerable significance at the Commonwealth heads of government meeting taking place here this week. The business forum drew 620 leaders from business and government from 50 countries, and it was also attended by six heads of state and government, and by more than 50 ministers.

Business leaders have said that that setting up a Commonwealth free trade agreement is feasible, and not just fanciful. The Commonwealth is a group of 53 nations that were once a part of the British Empire.

”Everybody including the United States are signing bilaterals, so I have suggested, and the CBC (Commonwealth Business Council) has suggested the last two days, including to the foreign ministers yesterday, that they should consider a preferential or a free trade agreement among the Commonwealth countries,” CBC co-chair Rahul Bajaj, chief executive of the Bajaj Auto company in India told IPS.

The business forum of the CBC was held in parallel with a two-day meeting of foreign ministers of Commonwealth countries. The proposal has been discussed directly with ministers from several countries, and the business suggestion has found considerable political support, sources at the forum meeting told IPS on condition that they were not named.

A Commonwealth free trade agreement has several advantages, Bajaj said. ”We have a common language, judicial system, free press, we all feel at home in Commonwealth countries.”

Such an agreement may not have to include every country, Bajaj said. ”There are three countries, UK, Malta and Cyprus which are members of the EU,” he said. ”As per their rules they may not be able to join a separate trade agreement. But what about the other 50 countries? All of these can.”

Over the last few years heads of government had been talking about terrorism and the environment, but they recognise that ”trade and investment matter, so we should do more and more.” And a free trade agreement between Commonwealth countries could enable more trade to everyone’s advantage, he said.

The fact that the Commonwealth countries are scattered need not be an obstacle, he said. ”If there can be an agreement between China and India, and ASEAN (Association of Southeast Asian Nations) and India, then why not the Commonwealth? Because we are not contiguous? So what has Chile to do with APEC (Asia-Pacific Economic Cooperation), which involves the United States?”

In a further development, ASEAN is now considering a trade agreement with the EU.

The CBC says Commonwealth trade could make it the largest bloc after the EU. ”As the world’s second largest trading bloc after the EU, handling trade worth 2.8 trillion (a trillion is a thousand billion) dollars annually, and with FDI (foreign direct investment) outflows of some 100 billion dollars, they account for more than 20 percent of international trade and investment.”

The CBC has proposed the establishment of a ”small group of Commonwealth heads and business leaders to develop a more deeply rooted public-private programme.”

But short of a Commonwealth free trade agreement, the CBC has sought ”Commonwealth participation in the World Trade Organisation (WTO) system at the intergovernmental level and through business-government dialogue.”

A successful conclusion of the Doha round could boost global trade by 300 billion dollars, of which 48 billion dollars would go to developing countries, the CBC says.

Excerpt:

By Sanjay Suri
VALLETTA, Malta, Nov 23 2005 (IPS)

The Commonwealth heads of government meeting taking place in Malta from Friday this week could turn out to be the most definite indication yet that little can be expected at the world trade ministers meeting in Hong Kong next month.

The two are linked. For one, Commonwealth secretary-general Don McKinnon has long made fair trade a mission of the Commonwealth. Second, given its composition, if members cannot find agreement here, then agreement at the World Trade Organisation conference in Hong Kong can be ruled out.

What happens on that Asian island in December can be gauged from what happens on this European one in November.

“The Commonwealth heads of government meeting is not officially a forum for a discussion on trade, but the Commonwealth secretary-general and the Maltese prime minister have said that the relationship between trade and poverty will be high on the agenda,” Salil Shetty, director of the Millennium Campaign, an international anti-poverty coalition, told IPS.

The summit is particularly significant because “it is happening in a European Union country, and because British Prime Minister Tony Blair who holds presidency of the EU, will be attending,” Shetty said.

“If world leaders agreed in New York in September to promote the Millennium Development Goals (MDGs), how can leaders then block it now,” he said. The Commonwealth meeting makes it “timely that pressure is applied from the poorer member countries.”

The MDGs were adopted by the United Nations General Assembly in 2000 to dramatically reduce poverty and hunger, promote infant and maternal health, and fight diseases like HIV/AIDS and malaria, among other goals, by 2015.

The Commonwealth is a group of 53 nations that were once a part of the British empire, and which includes Britain. The other developed countries among its members are Australia, New Zealand and Canada. So distinct are these from the rest that they have come to be known as a sub-group within the Commonwealth – the ‘ABC’ countries.

The Commonwealth includes some of the emerging new economies – India, South Africa, Malaysia – and some of the poorest countries in the world, including many small island states in the Caribbean and the Pacific.

But they share a common past by way of British colonisation and influences. That past has left a common hangover that the Commonwealth seeks to sustain, and build upon: the English language, democratic institutions, a strong legal system.

That makes the Commonwealth a microcosm of the world – and not such a small microcosm either because the population of the Commonwealth countries is close to two billion. That large club will be looking for some commonality on a trade deal ahead of the Hong Kong meeting.

But Britain and Canada are members of the G8, the group of leading industrialised nations (the others are the United States, France, Germany, Italy, Japan and Russia). Britain and host Malta (a tiny island country in the Mediterranean with a population of 400,000) are members of the European Union (EU).

Few believe that these countries will place their interest in the Commonwealth above that of the EU or G8.

Take host Malta, which is pushing for a hawkish EU position that would tie development aid to commitments by poor countries to control migration. The poor countries from which migrants come include several Commonwealth countries in Asia and Africa.

And while Britain is far less insistent on agricultural subsidies than France, nobody even asks the question whether Britain would ditch the EU to adopt a Commonwealth position that its poorer members would be happy with.

That the Commonwealth bosses themselves are not very optimistic became clear Wednesday, when McKinnon was asked what the Commonwealth could do concretely to help the poor among its members.

“Do you mean how can this summit solve the world’s problems?” McKinnon replied. He clearly did not believe it could solve the problems of the world, or even those of the Commonwealth world.

The Commonwealth was not looking for “big bang” solutions, he said. “The conference will discuss which objectives and programmes within the Commonwealth could be targeted to reach our overall aims of networking.”

The leaders are all in agreement “at the headline level,” Shetty said. It is specific action that is falling short.

The agenda of the meeting itself is a perhaps new acknowledgement of the Commonwealth’s limitations. The heads of government used to be a five day-affair; for this conference that has been cut to three days over the coming weekend. Leaders will spend most of that time at one of Malta’s most expensive new tourist resorts.

But officials insist this will be no weekend break; the leaders will talk extensively, almost without aides, to agree a conference statement. That statement cannot leave trade out; the success of the summit – as with the one next month – will depend on what gets agreed, and what does not.

The little that should be expected is indicated also by the absence of several leaders. Among the significant absentees will be the prime minister of India, which is by far the biggest member of the Commonwealth.

The kind of statements the Commonwealth is known to produce – that “lead nowhere” – are being heard already. “Globalisation is challenging all countries,” Maltese Prime Minister Lawrence Gonzi said at a press meet Wednesday. “The Commonwealth, with its diversity, is an excellent locus to transform these challenges into opportunity.”

Poverty is the root problem, he said. “Once that is properly tackled, we can hopefully see all the Commonwealth develop further.” He said nothing about dropping import tariffs or subsidies that fuel poverty, or about more development aid or debt cancellation.

What speaks louder is what is not getting said.

Excerpt:

By Humberto Márquez
CARACAS, Nov 22 2005 (IPS)

Trade agreements are one thing and integration is another, “so dissatisfaction with the former should not deter us from the latter,” according to Allan Wagner, secretary-general of the Andean Community, who is trying to paper over the cracks in Latin America’s oldest trade bloc.

The bloc formed by Bolivia, Colombia, Ecuador, Peru and Venezuela has been experiencing a sort of “Black November,” due to differences expressed this month on the very issues that led to its creation 36 years ago, such as trade negotiations with third party countries and united positions at international forums.

There have also been discrepancies over questions that have arisen more recently, like the best way forward for the incipient South American Community of Nations, or military agreements to combat drug trafficking, terrorism and insurgency.

At the same time, however, there has been progress on energy agreements, and in seeking accords on fulfilling basic social needs.

“Andean integration is not occurring in outer space, it is neither a simple nor an easy matter, but we know where we must place our solidarity and alliances,” said Wagner in Caracas.

It was the very president pro tem of the Andean Community, Venezuela’s leader Hugo Chávez, who said a week ago that his country “has nothing to gain from the present Andean Community,” because “our course is set in the direction of the Mercosur (Southern Common Market), where the axis of South American liberation is to be found: Caracas-Brasilia-Montevideo-Buenos Aires.”

He was referring to the leftist or centre-left governments currently in power in Venezuela, Brazil, Uruguay and Argentina.

Venezuela is set to become a full member of Mercosur – comprised of Argentina, Brazil, Paraguay and Uruguay – in December.

Wagner said Chávez’s remarks “reflect our dissatisfaction with the Andean Community as it is now, because it is quite clear that trade agreements are one thing and integration is another. Integration has to be political, social and economic.”

“If we are seeking integration merely for trading purposes, it’s not worth carrying on, because the bigger markets like the United States and the European Union will have the advantage every time,” he added.

Chávez did not hide his displeasure at the support that Venezuela’s Andean partners gave to the proposal to refloat negotiations in search of a Free Trade Area of the Americas (FTAA), a Washington initiative, the more so because three of the countries – Colombia, Ecuador and Peru – are discussing a free trade treaty with the United States.

At the Summit of the Americas held early this month in the southeastern Argentine resort city of Mar del Plata, Venezuela aligned itself with the full members of Mercosur in rejecting the revival of the FTAA talks, as the other 29 participating countries were pushing for.

To make matters worse, the three heads of state who are discussing a trade treaty with Washington, namely Alvaro Uribe of Colombia, Alfredo Palacio of Ecuador and Alejandro Toledo of Peru, posed for photographs with U.S. President George Bush, who is a fierce opponent of Chávez.

Neither did the summit prove to be the key to finalising the hemisphere-wide free trade treaty.

In the meantime, negotiators from the three Andean countries were working against the clock with their U.S. counterparts in Washington to resolve differences over agricultural exports, textiles, rules of origin, intellectual property rights on medicines, and telecommunications.

Peru, realising that it was further ahead in the talks than its neighbours, suggested that it sign its own treaty with the United States before all of the negotiators pack their bags on Dec. 6 to head to the World Trade Organisation (WTO) ministerial conference in Hong Kong.

And last week, delegates of the military high commands of Bolivia, Colombia, Ecuador and Peru met with the delegate from the United States in Quito, and invited Brazil but excluded the fifth member of the Andean Community, Venezuela.

While renewing its military alliances with the other Andean countries to combat drug trafficking, guerrillas and terrorism, the Bush administration accuses Venezuela – without providing concrete evidence – of trying to destabilise its neighbours and criticises Caracas’s decision to buy Russian, Spanish and Brazilian arms.

Meanwhile, trade has increased among the other Andean countries to a total of more than 5 billion dollars a year.

Wagner, however, believes that “what was born (in 1969, with the additional participation at that time of Chile) as a large-scale development project has ended up as a trading scheme.”

For that reason he welcomed the idea to hold an extraordinary meeting of the Andean Presidential Council on Jan. 12-13, 2006 to invigorate the bloc’s agenda.

In the first place, the presidents will create Petroandina, a platform for cooperation on energy matters. Energy ministers will be meeting to prepare for this at the end of this month.

The leaders will also discuss putting into effect a “humanitarian social fund” for health, housing, education and sanitation programmes targeting the poorest sectors of society, to which Venezuela has offered to contribute 50 million dollars, Wagner pointed out. The other countries may contribute cash, goods or labour.

“We need a strategy for social cohesion across the Andean countries, and we need integration to reach the people on the ground, who have not even realised that the process exists. Integration has been a topic for the owners of export businesses,” rather than for the public at large, Wagner admitted.

“A new agenda will allow us to build a new Andean Community. In time, however, the emergence of the South American Community of Nations will fuse us all together and neither the Andean Community nor the Mercosur will be needed any longer,” he stated.

Excerpt:

By IPS Correspondents
MEXICO CITY, Nov 9 2005 (IPS)

Most of the countries in Latin America and the Caribbean want a Free Trade Area of the Americas (FTAA), even in a less ambitious form, as opposed to a handful of nations – albeit an economically powerful minority – that reject the idea.

Experts and activists are thus wondering if it is still possible to relaunch the initiative, originally proposed by the United States.

“To speak of an FTAA without Mercosur (Brazil, Argentina, Uruguay and Paraguay) and Venezuela is not a risky assertion. In fact, it already partially exists,” said Germán de la Reza, a professor specialising in trade integration issues in several Mexican universities.

He was alluding to the trade agreements that the United States has already signed with Chile and with five Central American nations plus the Dominican Republic (CAFTA), as well as others that it is negotiating with Colombia, Peru, Bolivia and Panama.

“There may be a later attempt to join these bilateral treaties into one,” thus giving rise to a new version of the FTAA, he told IPS. The problem is that this strategy, emanating from the United States, “isolates each Latin American country from the regional context, reducing their bargaining power.”

Luis Macas, president of the powerful Confederation of Indigenous Nationalities of Ecuador (CONAIE), partly agrees with de la Reza. “At the level of bilateral accords, it is true that progress is being made towards a different FTAA, but it will never come into existence because, even though the majority of governments may want it, the people will resist it,” he remarked to IPS.

The fourth Summit of the Americas, held Nov. 2-3 in Argentina, concluded with a final declaration in which 29 countries, whose visible leader was Mexico, reaffirmed their interest in reviving the FTAA talks.

The remaining five countries stated that conditions are not ripe for moving ahead with the FTAA at present. This group, composed of Argentina, Brazil, Paraguay, Uruguay and Venezuela, accounts for 75 percent of South America’s combined gross domestic product.

The first Summit of the Americas took place in Miami, Florida in 1994, and all active members of the Organisation of American States (OAS) – all of the countries in the hemisphere with the exception of Cuba, which was expelled in 1962 – were invited.

According to Venezuelan President Hugo Chávez and social activists who met last week in Argentina at the third Peoples’ Summit, the FTAA is already dead.

That statement is true if it refers to the original version of the initiative, outlined at the first Summit of the Americas, said de la Reza.

The leaders meeting at the April 2001 Summit of the Americas in Quebec City, Canada had agreed that the negotiations for the hemispheric free trade treaty should be completed by January of this year – a goal that was not met – and that the accord was to go into effect this December after ratification by the legislatures – a target that is clearly impossible.

However, trade ministers meeting in Miami in 2003 agreed on a scaled-back version of the hemisphere-wide free trade zone, involving an “a la carte” approach in which each country can join under flexible terms and timetables. This version, dubbed “FTAA lite”, may begin to take shape now, after the failure to reach an agreement at the Argentine summit.

At last weekend’s summit, Mexican President Vicente Fox, whose country is the global leader in terms of the number of free trade treaties signed – a total of 12 – said 29 countries in North America, Latin America and the Caribbean wish to go ahead with the FTAA, and will do so even without the dissenting nations.

The pro-FTAA group includes countries that trade predominantly with the United States, or are especially keen on making headway in the U.S. market.

If others wish to create an FTAA among themselves, that’s their affair, replied Celso Amorin, the Brazilian foreign minister. Brazil, along with the other countries of Mercosur (Southern Common Market), trades mainly with other South American nations or with countries outside the continent.

“There is evidently a regional split, but fortunately at least some countries are willing to fight for real integration, not the hegemonic and annexationist kind represented by the FTAA,” said the head of CONAIE.

To the civil society organisations meeting at the Peoples’ Summit, the FTAA is a refined form of U.S. neocolonialism which is trying to exploit weak Latin American markets.

Under the banner of the so-called Bolivarian Alternative for the Americas (ALBA), advocated by Venezuela and Cuba, CONAIE and other social organisations in the region are pushing for the total derailment of the FTAA process and the creation of a different model of integration which puts people first.

This alternative project arouses a certain sympathy among Mercosur countries, whose political power in the region is increasing, especially that of Brazil, the main instigator of the South American Community of Nations that came into being last year at a regional summit in Peru.

But according to some observers, this stance is flimsy.

If ALBA or the South American Community of Nations work in a commercial sense and bring about economic benefits, Brazil, Argentina and others will stick with them, but if they fail to do so and it begins to look as though the FTAA might be more effective, the countries will switch allegiance, Mexican professor of economics Carlos Vásconez commented to IPS.

“It’s all a question of interests,” he said. The original FTAA proposal lost ground, among other reasons, because of Washington’s refusal to phase out its own protectionist measures, especially in agriculture, where the continued subsidies hurt strong agricultural competitors like Brazil, Argentina and Uruguay.

Washington argues that the issue must be dealt with in the framework of the World Trade Organisation (WTO), and says that the U.S. cannot back down when other countries that shell out farm subsidies, such as Japan and nations in the European Union, continue to do so.

Agricultural protectionism will be on the agenda at the next ministerial conference of the WTO, to be held in December in Hong Kong.

Brasilia affirms that it may even reconsider the free trade agreement with the U.S. after the WTO meeting, on condition that progress is made in Hong Kong on the question of subsidies. But everything indicates that there will be little movement on the thorny issue of agricultural trade.

“Everything depends on the bottom line. We have to forget about all the political paraphernalia and understand that what countries are really interested in is closing good business deals, whether in the FTAA, the ALBA or wherever,” said Vásconez.

For his part, de la Reza maintains that above and beyond the discussions on the future of the original FTAA or the “lite” version, the free trade project has clearly already had an impact on the region.

As he sees it, thanks to the FTAA process, there has been “a step forward in

facilitating business on a continental scale, and the harmonisation of legislation has been directly or indirectly stimulated in several areas of economic interest (dumping, property rights, investment protection, etc.).”

Besides, “it has created a basis for fairly rapid negotiation of bilateral free

trade treaties, which are already in effect in 10 countries in the continent, and could soon be operating in 13,” he pointed out.

Excerpt:

By Diana Cariboni
MONTEVIDEO, Nov 7 2005 (IPS)

If the fourth Summit of the Americas left anything clear, it is the difficulty of reaching agreement on a concept of integration in the region.

The Friday and Saturday summit in Mar del Plata, Argentina took place in the midst of bilateral tensions and disputes between various countries, the stagnation of proposals for Latin American integration, and differences that have emerged even between countries governed by like-minded political forces.

The ever-present tension between Washington and Caracas was on clear display in the resort town in eastern Argentina. While Venezuelan President Hugo Chávez attended the summit, he also took part in the massive march to protest the presence of U.S. President George W. Bush, with whom he posed later for the customary “official” photo-op.

The traditionally warm ties between Argentina and Uruguay, meanwhile, had been tested by the most serious diplomatic incident in years shortly before the summit, with both countries calling in their ambassadors for consultation after a provincial governor in Argentina criticised Uruguay’s plans to build two pulp mills on a river forming part of the border between the two countries.

No meeting was held in Mar del Plata to smooth things over.

Chile and Peru have also found themselves in the middle of a new dispute over the demarcation of their sea border, while Chile still has no diplomatic ties with Bolivia, which were broken off in 1978, and continues to refuse to discuss a solution to the demand for an outlet to the Pacific Ocean by that country, left landlocked after it was defeated by Chile in the 1879-1883 War of the Pacific.

While the leftist Chávez evoked a gallery of historic figures – from Rosa Luxembourg to Mao Zedong and Juan Domingo Perón – in Mar del Plata to lash out at Bush, Uruguay’s socialist President Tabaré Vázquez shook hands with the U.S. leader after the two governments signed a bilateral investment protection treaty.

One definition of integration refers to the process of incorporating parts into a whole. But it seems some “parts” are always left out in this hemisphere.

There has been one glaring absence at the Summits of the Americas, which began to be held in 1994 in Miami, Florida: Cuba, excluded from the Organisation of American States in 1962 for ideological reasons that eventually became political as well, as democratic governments became the norm.

The 19th century struggles for independence from European colonialism in Latin America were also marked by dreams of regional integration.

But the integration envisioned at the Summits of the Americas, a hemisphere-wide free trade zone, would be created in a complex scenario, given that one of the parties is the world’s sole superpower, the United States, while the diverse countries of Latin America and the Caribbean are united by one common denominator: underdevelopment.

Nevertheless, in the 1990s, the majority of the nations of Latin America embraced, with varying degrees of enthusiasm, the idea of a Free Trade Area of the Americas (FTAA), just as they embraced the neoliberal concepts of privatisation, the opening up of trade, and the dismantling of the state.

In what was clearly a backlash, the political changes seen in recent years in South America gave rise to the election of a number of “progressive” governments – to use a label under which it would be possible to group the administrations currently governing Brazil, Argentina, Uruguay, Venezuela and Chile.

In the meantime, organised civil society has been growing in size and influence in this region as in the rest of the world, saying “no” to the FTAA and holding marches, forums and workshops towards that end.

With Brazil at the head, the progressive South American governments are seeking to revive old concepts of integration “among ourselves,” which would leave out the United States, at least until it is possible to negotiate on a more equal footing.

As a launching platform, Brazil proposed regional integration based on Mercosur – the Southern Common Market, made up of Argentina, Brazil, Paraguay and Uruguay – which has gradually accepted most of the rest of South America as associate members, while the South American Community of Nations was founded last year.

But so far, these efforts have gone no further than meetings, declarations and documents. The Mercosur trade bloc has failed to resolve problems that are crucial to reaching the most basic form of trade integration, and is plagued by continuous disputes and demands from different productive sectors in each member country, while there has been little progress in agreeing on dispute settlement mechanisms.

The two largest partners, Argentina and Brazil, are constantly sparring over what one perceives in the other as a competitive threat, and the smaller members, Paraguay and Uruguay, reap few benefits from the partnership.

In the meantime, many heads of state and government skipped the last South American Community of Nations summit, held in Brasilia in late September, and the participants produced little of note.

The “idea” of South American integration remains elusive. But that has not done anything to favour the FTAA. Despite the tensions within Mercosur, the bloc stood firmly this weekend by its resistance to the U.S.-promoted initiative, with the staunch support of Venezuela. And for the first time, a Summit of the Americas ended without any agreement on the question.

Chávez went so far as to declare that the FTAA had been “buried” in Mar del Plata.

Actually, the funeral had begun in the special summit held in January 2004 in Monterrey, Mexico, when expectations were slimmed down to an agreement widely known as “FTAA lite”, which emphasised bilateral accords and included no clear timetable.

No FTAA talks have been held for 23 months, although Washington has continued to push for bilateral agreements, signing a free trade deal with five Central American countries and the Dominican Republic, and negotiating a similar pact with Colombia, Ecuador and Peru.

With the FTAA frozen or buried, attention has turned to the World Trade Organisation (WTO). The Doha Round of multilateral talks are in the final stretch, which requires a more in-depth debate on the protectionist agricultural policies maintained by powerful industrialised nations – one of the clearest obstacles to progress towards an Americas-wide free trade zone.

Something else happened in Mar del Plata: the thousands of Latin American activists taking part in the third Peoples’ Summit celebrated the death of the FTAA and claimed they had killed it. They also called for an alternative kind of integration, one that is still waiting for its moment to emerge.

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By IPS Correspondents
BRUSSELS, Sep 27 2005 (IPS)

As European Union trade chief Peter Mandelson prepares to kick off a new phase of trade negotiations in the Caribbean this week, trade groups are asking the bloc to shelve regional agreements in order to avoid a “development disaster”.

The Britain-based Traidcraft and the Kenya-based non-governmental organisation (NGO) EcoNews Africa say the bloc’s current proposals would require developing countries to open up their markets rapidly to European corporations, threatening jobs, industries, government revenues and public services in some of the poorest countries in the world. Both organisations are members of a ‘Stop EPA’ campaign launched in October last year.

Mandelson will travel to St. Lucia in the Caribbean Wednesday (Sep. 28) to launch a new phase of Economic Partnership Agreement (EPA) negotiations with the Caribbean region.

EPAs are reciprocal trade deals under the Cotonou agreement between the European Union (EU) and 77 countries from Africa, the Caribbean and the Pacific (ACP) regions. The Cotonou agreement was named after the capital of the West African nation Benin where it was signed in June 2000.

The proposed deals under the agreement would remove controls on import prices and allow EU member states to sell subsidised goods more easily to those countries. The deals are due to be concluded by December 2007 and will be implemented between 2008 and 2020.

The EU says EPAs will integrate ACP states into the world economy, promote sustainable development and contribute to poverty eradication. Mandelson said he is a “strong supporter” of such agreements.

“These are not classic free trade agreements where both sides make equal concessions: we have no agenda of liberalisation that we want to force on the poorest ACP countries. Rather, they are development tools that will lead in time to the growth of regional markets and trade with the EU,” he said in a statement Monday (Sep. 26).

But the trade groups say EPAs have been “a highly political process driven by the EU and about which the ACP has consistently expressed fundamental concerns.” They say EPA negotiations have been “very imbalanced”, with the EU generally getting its way at each stage. They are urging Mandelson to start work on alternatives to EPAs.

A report by Traidcraft and EcoNews Africa released Tuesday says that by way of example the declining manufacturing sectors, increased poverty and rising unemployment levels in Kenya should be taken into account before committing to “more of the same”.

The report ‘EPAs: Through the Lens of Kenya’ says liberalisation in the country has brought “dire hardship” that includes soaring crime rates, prostitution, lost education and even suicides.

“The slump resulted in the number of poor people rising from 11 million to 17 million – more than half of Kenya’s population,” the report says. “Primary school enrolment fell, illiteracy grew, life expectancy dropped, the proportion of fully vaccinated children plummeted and death rates among babies and under-fives increased.”

The report says that the European Commission itself estimates that under reciprocal liberalisation Kenya would lose 82 percent of its customs revenue – 12 percent of government income.

Given that EPAs will force Kenya to liberalise still further, allowing market access to highly competitive European businesses, the report says past experiences show what is at stake, and what the impacts on Kenya’s future development are likely to be.

The trade groups are calling for EPAs “as they are currently envisaged” to be stopped everywhere because they say ACP countries are negotiating with great reluctance.

“They have been forced to the negotiating table: partly out of fear that they will lose market access to the EU if they do not agree to an EPA, and partly because there is no alternative available at the moment. They are also concerned that refusing to sign may threaten future aid flows,” the report says.

The groups are satisfied that their campaign is making some headway.

“We have made progress in that the UK government has issued a position paper questioning the Commission’s approach to the negotiations,” Liz Dodd, trade policy adviser for Traidcraft told IPS. “But the Commission is not moving so far, and even described the UK intervention as unhelpful,” said Dodd.

Ultimately the EU’s 25 member states set the agenda, Dodd said. “We are calling for them to stop hiding behind the Commission and to give Peter Mandelson a new pro-development negotiating mandate.”

Traidcraft is demanding that the EU provides ACP countries an alternative to EPAs that would at least not leave them worse off than they are now.

“It is not up to us to decide what this should be, but there are a number of options,” said Dodd. “Particularly relevant at the moment is that the EU should work with the ACP to change WTO rules on regional trade agreements. This would allow fairer deals to be agreed between countries at very different levels of development.”

There will be a major review of EPAs next year when the NGOs hope that EU and ACP member states will “urgently stop” the current free trade EPAs before many of the world’s poorest countries are “forced to negotiate away their future.”

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By IPS Correspondents
KINGSTON, Aug 17 2005 (IPS)

Recent developments in international trade highlight the difficulties facing the 15-member Caribbean Community (Caricom) as it prepares for a key World Trade Organisation (WTO) ministerial meeting in Hong Kong this December.

The continued floundering of the Free Trade Area of the Americas (FTAA), coupled with the United States’ recent passage of the Central American Free Trade Agreement (CAFTA) and ongoing concerns about the European Union’s banana and sugar pricing regimes are some of the major challenges facing this grouping of small developing countries.

The FTAA would unite the economies of the Americas (except Cuba) into a single free trade area, while CAFTA lifts barriers between the United States and Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua and the Dominican Republic.

Negotiations on the FTAA were supposed to have been completed by Jan. 1 this year, but disputes over intellectual property rights and farm subsidies, combined with vehement opposition from civil society groups throughout the hemisphere, have stalled consensus.

The contentious issue of subsidies by developed countries is likely to be high on the agenda at the Hong Kong meeting, as well.

“In Hong Kong, what we need to do is to press for defensive and offensive objectives,” said Richard Bernal, the head of Caricom’s Regional Negotiating Machinery. “On the defensive end, we want to keep the preferences as long as possible and get special and differential treatment.”

“On the offensive side, we want to be sure that the goods and services we can produce competitively now and in the future, that we secure the best possible terms and conditions for those.”

Bernal acknowledged the pessimism many feel about the upcoming WTO meeting, but believes there is room for hope.

“Remember that each round of trade liberalisation gets more difficult because you have done the easier things before, and you are now into areas which are very sensitive or very complex,” he said.

“You shouldn’t be discouraged by the fact that this is taking longer than was anticipated when the Doha developmental agenda was decided on. These things take a while – for example, the last round of negotiations went for nearly 10 years but it produced a useful result, so while the outlook for the Hong Kong ministerial is not very encouraging, we shouldn’t lose confidence in the process,” he said.

“It simply means that it will go on longer than we expected, but it is better to take the extra time to ensure that we get a good agreement, rather than get any agreement by a particular date.”

In the meantime, Caricom is continuing to lobby for favourable treatment for its exports to the EU, and charting the best way to proceed in the absence of progress on the FTAA.

This need for simultaneous engagement in critical negotiations has always been a challenge for the resource-strapped countries of Caricom. It is compounded by the fact that many believe the FTAA is now dead in the water, increasing the focus on negotiating new bilateral deals.

Regional trade consultant Rosalea Hamilton says it is important to determine the extent to which United States trade agreements such as CAFTA will create special conditions of market access that exclude Caricom countries.

“The question for all countries that are not part of these special arrangements, including Caricom, is whether those special terms will negatively impact our trade relations with the U.S.,” she said, noting the “the experience of NAFTA with respect to textile and clothing is a case in point”.

NAFTA, the predecessor to deals like CAFTA and the FTAA, groups Canada, the United States and Mexico.

“We saw very actively the flight of a lot of (manufacturing) activity into Mexico because of that arrangement, so it begs those questions,” she told Radio Jamaica.

Bernal says that while the new CAFTA agreement will not in itself place Caricom at a significant disadvantage, the controversy surrounding the agreement in the U.S. Congress was cause for concern.

“The agreement passed by just two votesàif an agreement that involves such a minute share of U.S. trade had such a difficult passage, what would be the prospects of an agreement that involves a substantial amount of U.S. trade, such as the Free Trade Area of the Americas, if and when those negotiations are completed, or the WTO Doha development agenda?” he asked.

Caricom is already involved in several bilateral agreements with countries like Colombia, Venezuela, Costa Rica, the Dominican Republic and Cuba, and is preparing for negotiations for an enhanced bilateral agreement with Canada, and the South American trade bloc Mercosur, he notes.

Although the possibility of a bilateral agreement between Caricom and the United States is being mooted now in the region, there has been no decision at the level of the heads of government in the Caribbean.

Bilateral arrangements have advantages and disadvantages that wider, multilateral agreements like the FTAA do not have, says University of the West Indies lecturer Patsy Lewis.

“Bilateral arrangements tend to zero in on areas of specific interest to the people negotiating, so if the U.S. is interested in getting access to a particular sector of the economy, they’re in a stronger position to do so,” Lewis told IPS.

“On the positive side, they may be more willing to offer you concessions on a bilateral level than they’re willing to do on a multilateral level or a broader regional level,” she added.

Whatever course of action is taken, it is important that a decisions be taken soon, says Rosalea Hamilton.

“At the last Caricom heads of government meeting, the heads decided that we ought to study having a bilateral arrangement with the U.S., so already the question is ‘what would such a bilateral arrangement look like?’. Part of my concern, my anxiety, is that we’re moving much too slow,” she said.

“It’s not clear whether we are truly ready as a region, (or) as individual countries to take on this challenge, and my fear is if we don’t wake up very quickly we’re going to be overwhelmed,” Hamilton warned.

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