Mercosur and Andean Community sign free trade pact
IPS | 19 October 2004
SOUTH AMERICA:
Region’s Two Major Blocs Sign Free Trade Deal
Raúl Pierri
MONTEVIDEO, Oct 19 (IPS) - South America’s two large trade blocs, the Mercosur and Andean Community of Nations (CAN), have signed an agreement to phase out all import tariffs over the next 15 years, with a view towards eventually creating an immense free trade zone in the region.
The so-called ”economic complementarity” accord will go into effect in 30 days, when import duties will begin to be lifted, Uruguayan Foreign Minister Didier Opertti told a news briefing Monday after the agreement was formalised in Montevideo, the capital of Uruguay.
The new trade deal will enable a group of 10 South American nations to become ”the world’s fifth largest trade bloc,” said Opertti, who was appointed as the new secretary-general of the Latin American Integration Association (ALADI), to replace Juan Rojas Penso, from Venezuela, next March.
The CAN, which is made up of Bolivia, Colombia, Ecuador, Peru and Venezuela; Mercosur (Southern Common Market), comprised of Argentina, Brazil, Paraguay and Uruguay; and Chile, one of the Mercosur associate members, overcame a number of sticking points in the past few months to sign the agreement at the 13th meeting of the council of ALADI foreign ministers in Montevideo Monday.
(Bolivia, Peru and Venezuela are also associate members of Mercosur, South America’s leading trade alliance.)
The agreement, which includes all of South America with the exception of the smaller economies of Suriname, Guyana and French Guiana in the northern part of the continent, on the Caribbean coast, was originally signed in December and was to enter into force in July.
But discrepancies between several countries with respect to removing tariffs on some products and the timetables for doing so led the negotiators to postpone the deadline for three months, to gain time to work through the obstacles.
The main differences came up between Peru and Uruguay regarding trade in textiles and bicycles, and between Ecuador and Paraguay, over soybeans.
After intense negotiations, the technical teams met again in August in Montevideo and finished drafting the accord, which then merely needed to be formally approved by ALADI.
Rojas Penso told IPS that tariffs would be phased out in stages, and through bilateral meetings between countries, without the need for parliamentary ratification in the majority of cases.
”We are rolling back 200 years of history of differences and disagreements in Latin America. We could imagine (Simón) Bolívar, (José de) San Martín and so many other independence heroes who dreamt of a grand union of South American republics, being here with us today,” said the president of the Mercosur Commission of Permanent Representatives, Eduardo Duhalde.
The former Argentine president said ”the next step” is the ”political union” of South America, which ”will be the most important political development of the decade.”
Peruvian Foreign Minister Manuel Rodríguez, whose country holds the rotating presidency of the CAN, described the agreement as ”the most important step towards Latin American integration” and a decisive move in the direction of ”the creation of a South American Community.”
The CAN and Mercosur together form a region of 17 million square kilometres, with a combined gross domestic product (GDP) of 800 billion dollars — greater than the GDP of Canada and of the Association of Southeast Asian Nations (ASEAN), noted Rodríguez.
Trade between the countries of the two blocs totals around 30 billion dollars a year.
Brazilian Foreign Minister Celso Amorim said in a press conference that South American integration should not be merely economic, but social and political as well. He also underlined the importance of furnishing the two blocs with the institutions needed to bring about integration, and of doing the same in the future for the ”South American Community”.
”This will put us in a stronger position in negotiations with the rest of the world, like the free trade accord with the European Union, and the FTAA (Free Trade Area of the Americas),” added Amorim.
The deadline for the creation of the FTAA — the free trade area promoted by the United States, which will include all countries in the hemisphere with the exception of Cuba — was originally late 2005, but the talks have virtually come to a standstill.
The interest in strengthening regional integration within Latin America was reflected in the resolutions approved Monday by the foreign ministers of the 12 ALADI member nations: Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela.
The resolutions form the foundation of a programme aimed at ”re-launching” the regional body ”in keeping with the new demands for integration”, and consolidating it as a key forum for regional cooperation and development, said Opertti, who promised to work towards those objectives in his term as ALADI chief.
