Brazil's Lula wants South American ''economic area''

By Boston.com-Reuters, 4/25/2003

RECIFE, Brazil (Reuters) - Brazilian President Luiz Inacio Lula da Silva said he and his Venezuelan counterpart, Hugo Chavez, agreed Friday to create an ''integrated South American economic area'' by the end of 2003.

Hosting Venezuela's leader in his home state in the northeast of Brazil, Lula said it was ''urgent'' to reach a free trade deal between the Mercosur trade group and the Andean countries of Venezuela, Colombia, Peru, Bolivia and Ecuador.

''We agree on giving the highest priority to the integration of South America,'' Lula said after meeting Chavez. ''We are in full agreement about ... a free trade zone between the Andean Community and Mercosur.''

The statement by Brazil's new center-left president signaled his ambition to continue his predecessor's drive to unite South America's main trade groups before the creation of a Free Trade Area of the Americas (FTAA), including the United States and Canada.

Mercosur includes Brazil, Argentina, Uruguay and Paraguay, as well as associate members Chile and Bolivia. Brazil is South America's largest economy.

Brazil's former President, Fernando Henrique Cardoso, sought to unite the region with an eye to giving it greater clout in comparison with the United States in FTAA negotiations. FTAA would be the world's largest free trade area, running south from the Canadian Arctic to Patagonia in South America. Trade is expected to begin in 2006.

Lula said that FTAA talks needed to ''keep in mind the different levels of economic development of the hemisphere's countries and the grave social needs in many of them.''

Lula hosted U.S. Treasury Secretary John Snow this week, who hinted during his trip that Washington could address Brazil's long-held grievance that the U.S. is doing too little to get rid of subsidies Brazil says hinders its farm goods from reaching U.S. markets.

''In spite of many promises and declarations, markets in developed countries remain closed to many of our products, especially those that have clear comparative advantages,'' Lula said in reference to farm exports.

Despite Lula's ambition to strengthen Brazil's negotiating clout by working with other South American states, his agriculture minister said in Washington Friday that Brazil could consider bilateral trade talks with Washington if it gained greater access to U.S. markets.