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Mercosur “is virtually fractured” Uruguay admits openly

MercoPress, Uruguay

Mercosur “is virtually fractured” Uruguay admits openly

10 December 2008

Mercosur presidential summit next week in Brazil has on the table an agenda of several highly sensitive issues that could deepen the rift between senior members Argentina and Brazil and junior members Paraguay and Uruguay, according to Uruguayan parliamentary sources.

The presidents from the four founding members of Mercosur are scheduled to meet in Salvador de Bahía together with other South American leaders but two issues, the Customs Code and the permanent chair of Unasur (Union of South American nations) will mark the tone of the meeting.

The prevailing feeling among Uruguayan ministers who last week were summoned to the Legislative Finance Committee was that the code will remain stalled and non-approved because of the different attitudes towards trade and open economies from country members.

While small members such as Uruguay and Paraguay favour lower tariffs and trade associations with other countries or blocks, Argentina prefers a “protectionist” emphasis, is not convinced of the elimination of the double tariff system —(Mercosur block plus each individual country)— and insists in including a clause enabling export taxes, such as those which generated the months-long dispute with Argentine farmers.

“Negotiations with Mercosur members on the Customs code remain at their level of difficulties, and most probably it will not be approved”, Uruguayan Foreign Affairs minister Gonzalo Fernandez told members of Congress.

Another area of contention is what Uruguay defines as Argentina and Brazil’s “bilateralism” with all its trade consequences among which a ban for junior members to reach agreements with third countries.

More over “Mercosur international negotiation capacity is dead” argues opposition Senator Sergio Abreu, because “Brazil and Argentina have different positions regarding international trade”.

While Brazil has been building bridges and yielding in the framework of the World Trade Organization, “Argentina has sided with the radical positions that aborted a tentative agreement last July in Geneva” added Abreu.

Senator Abreu said that there’s a growing feeling among Uruguayan politicians and businessmen that there are no solutions on sight and “it is becoming increasingly non viable to continue coexisting under these conditions with a Mercosur which is virtually fractured”.

Another thorny issue is the Unasur chair for which there’s allegedly a majority support for former president Nestor Kirchner.

However Uruguay, given the ongoing disputes with the Kirchner administrations regarding the construction of pulp mills and the dredging of the River Plate access canals, has vetoed the proposed name.

Uruguay until last week had reiterated its strong position and since Unasur decisions must be taken on consensus it’s hard to see any advance in this field. Since one black ball is enough to erase consensus, it’s not clear if the rest of Unasur members actually support Mr. Kirchner for the top job.