Thursday, 12 January 2012

Brazil: Mercosul summit

The 42nd Mercosul summit was held in Montevideo on 20–21st December, with President Dilm Rousseff in attendance along with her counterparts from Argentina, Paraguay, and Uruguay. The most important political issue addressed was Venezuela's membership in the trading bloc.

The Paraguayan Senate continues to oppose it, as it has for the last three years. At the initiative of Uruguay, and via convoluted legal reasoning, an attempt was made to by-pass parliamentary ratification to permit Venezuela to join. Ecuador's application is also expected. It was decided that about 200 products will be exempted from Mercosul's Common External Tariff and therefore have their tariff raised by up to 35 per cent. This is multilateralised protectionism.

Another decision taken at the summit, at the behest of Argentina, was to prohibit ships bearing the flag of the Falkland Islands (Malvinas) from access to the ports of member countries. This extends a prohibition that has been in force for several years in Argentina. The summit also approved a free trade agreement with the Palestinian Authority (a quid pro quo for having in earlier years approved one with Israel).

The slim results of this Mercosul summit reflect the mediocrity of the trading group's agenda. Shortly after the summit, the Pacific Alliance (Chile, Colombia, Mexico) held its second summit, on 4th December at Mérida, Mexico. Panama indicated it might join. The trade volume of Alliance members may soon exceed that of Mercosul partners. In any event, the very creation of the Alliance may be interpreted as contrary to Brazil's old aspiration to a South American common market.

For more news and expert analysis about Brazil, please see Brazil Focus.

© 2011 Menas Associates

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