Development & Aid, Economy & Trade, Headlines, Latin America & the Caribbean

MERCOSUR-VENEZUELA: Integration by Ultimatum

Humberto Márquez

CARACAS, Jul 5 2007 (IPS) - Venezuela has lost patience with delays in Paraguay and Brazil’s congressional ratifications of its entry into the Southern Common Market (Mercosur), while it is being urged to speed up its adoption of the common external tariff and other bloc regulations.

Venezuelan President Hugo Chávez issued an ultimatum on Tuesday, saying he will withdraw his country’s application to join Mercosur unless it is approved within three months.

“We won’t wait any longer than that. The Brazilian and Paraguayan Congresses have no reason not to approve our entry: no political, legal, economic or moral reasons,” he said.

“We have been under pressure since last January to ratify the external tariff and the other Mercosur regulations, but the parliaments of Brazil and Paraguay have taken a whole year to ratify our protocol of membership,” said Gustavo Márquez, the negotiator for Venezuela’s entry into the group.

Mercosur was created in 1991 and also includes Argentina and Uruguay.

Almost exactly a year ago, Presidents Néstor Kirchner of Argentina, Luiz Inácio Lula da Silva of Brazil, Nicanor Duarte of Paraguay, and Tabaré Vázquez of Uruguay signed the protocol for Venezuela’s entry into Mercosur, alongside Chávez in Caracas.

But “delays began in Brazil, and the message six months ago was that if we did not give way on deregulating a package of products, the Congress would not approve Venezuela’s entry,” Chávez said.

Faced with this situation, the Venezuelan president ordered Foreign Ministry negotiators not to give another inch. “We have already conceded all we should,” he said.

Venezuela left the Andean Community of Nations (CAN), to which it belonged for decades together with Bolivia, Colombia, Ecuador and Peru, in 2006. However, it has continued to use the Andean bloc’s external tariffs for imported goods, which rise from zero to five, 10 or 20 percent, depending on the added value of the goods.

Mercosur, in contrast, applies 11 different tariffs of between zero and 20 percent on goods imported from countries outside the bloc, according to their added value.

Exceptions to the free trade rules that otherwise govern the circulation of goods within Mercosur, in order to protect national production, are also being negotiated. Argentina and Brazil each have 100 protected items, Uruguay has 225 and Paraguay 649.

Without going into details, Márquez said that Venezuela has tried to preserve tariff barriers in line with its food security policy.

La Nación, a Buenos Aires newspaper, reported that at the meetings the Venezuelan experts showed unwillingness to make progress in the negotiations.

“The bottom line is that the economies of Venezuela and Mercosur do not complement each other very well, and the Venezuelan negotiators are working under the orders of a president who is essentially interested in making a bigger political splash,” the head of the Caracas Chamber of Commerce and Industry, Víctor Maldonado, told IPS.

A successful integration process, according to Maldonado, “begins by selling, not by buying, and in our rapprochement with Mercosur what we have seen is a veritable tidal wave of imported goods from Argentina, Brazil and Uruguay.”

Between 2003 and 2006, Argentine exports to Venezuela grew by 475 percent, rising in value from 137 to 790 million dollars a year, while imports from Venezuela rose from 12 to 31 million dollars a year over the same period.

In Brazil’s case, exports to Caracas multiplied six-fold, from 606 million dollars in 2003 to 3.55 billion dollars in 2006, while Venezuelan exports to Brazil are worth only 400 million dollars a year.

Venezuela imports mainly dairy and meat products, soya oil, cars, tractors, vehicle parts and other equipment. “Many of the purchases are of agricultural and livestock surpluses, made by the State in response to emergencies. They aren’t based on a free market strategy,” Maldonado complained.

In the absence of agreement on tariffs and other trading rules, Mercosur partners are continuing to use Economic Complementation Agreement No. 59, signed in December 2003, in their trade with Venezuela. Colombia and Ecuador are also included in this agreement.

Meanwhile, the volume of political statements on the controversial entry of Venezuela continues to rise, after the Brazilian government repeated on Wednesday that “it will not accept deadlines from anyone, however good a friend they are,” as Walfrido dos Mares Guia, the Institutional Relations minister, said.

In Paraguay the Duarte administration, which had been waiting for “the right time to send the protocol to parliament,” where the opposition is in the majority, handed over the document to parliament on Wednesday.

Alfredo Ratti, the chairman of the Foreign Relations Commission in the Paraguayan senate, and an activist in the opposition Patria Querida party, said that it was “impertinence” for Chávez “to arrogate to himself the authority to demand responses from sovereign congresses in other countries.”

His Brazilian opposite number, opposition member Heráclito Fortes, said that the Venezuelan president “thinks that he represents the three branches of government in his country, but here in Brazil things are different. Congress will decide at what it considers to be the right time.”

Lula’s adviser for Latin American affairs, Marco Aurelio García, said that Chávez “took a sovereign decision to join Mercosur. If he now finds that it doesn’t suit him, that will also be a sovereign decision. No one will lose face if the negotiations are not successful.”

In Argentina, the Foreign Ministry’s Under-Secretary for Integration, Eduardo Sigal, acknowledged that his country “is concerned” about the present controversy, but said he had confidence that “the strategic good sense of Mercosur will prevail,” and thought that “Chávez will not leave.”

Roberto Conde, the Uruguayan president of Mercosur’s parliament, said he would consult legislators from every country in the group about the Venezuelan ultimatum, and advocated “lowering the ideological tone of the debate.”

Venezuelan negotiator Márquez said that “behind attitudes like that of the Brazilian congress is the hand of the United States, which does not want the strong bloc of the present Mercosur plus Venezuela leading the way to South American unity.”

Chávez complained that Mercosur “is an outdated mechanism and is leaking like a sieve. The Andean Community and Mercosur were founded in the context of a free- market economic model and offer integration for the élites, for business, for transnational companies, not integration for the peoples.”

Lula, who has been a political ally of Chávez’s for years, arrived at a “strategic alliance” with the European Union (EU) in Lisbon on Wednesday, with the purpose of unblocking the negotiations for a Free Trade Agreement (FTA) between Mercosur and the 27-nation union.

Chávez has consistently criticised free trade agreements with the EU and, above all, with the United States. He left the CAN after two of its members, Colombia and Peru, signed separate FTAs with Washington. He broke with the Group of Three, which included Colombia and Mexico, for the same reason, Márquez said.

Chávez, however, also insisted that “we can only make progress together. Neither Venezuela alone, nor Brazil alone, nor Argentina alone can become a world power. We can only achieve that together.”