South American leaders bolster Mercosur trade bloc

Reuters, 06.18.03, 5:01 PM ET   By Jose Maria Amarilla ASUNCION, Paraguay (Reuters) - South American leaders vowed Wednesday to make the moribund Mercosur trade bloc a common market by 2006 in an effort to counter U.S. dominance in Americas-wide free trade talks. Galvanized by the new presidents of Brazil and Argentina, the bloc is also looking to expand after four years of near paralysis triggered by Brazil's currency crises in 1999 and 2002 and Argentina's economic collapse last year. "Strengthening Mercosur is essential for carrying out negotiations with other countries and trade blocs," Brazilian leader Luiz Inacio Lula da Silva said. "In this way, South America's strong presence in the world will be guaranteed." Mercosur -- or the Southern Cone Common Market -- was founded in 1991 by Argentina, Brazil, Paraguay and Uruguay. Bolivia and Chile are associate members of the world's third-largest trade bloc comprising 240 million people. The bloc functions as a customs union. People and goods do not move freely across borders, and constant disputes arise over a few remaining tariffs, dumping and farm subsidies. Argentine President Nestor Kirchner -- who took office three weeks ago vowing to favor Mercosur over the United States and Europe -- said Venezuela, Colombia, Peru and Ecuador should be incorporated into the bloc. Venezuelan President Hugo Chavez, a guest at Wednesday's summit, backs the same goal. South American leaders want to bolster Mercosur to present a strong front in talks on the Free Trade Area of the Americas, the 2005 launching of which is U.S. President George W. Bush's top policy priority in Latin America. "We should not allow ourselves to be guided by imposed, predetermined timetables, but rather by the outcome of mutually beneficial negotiations," said Kirchner, Argentina's sixth president in 18 months. On Tuesday, South American economy ministers and central bank presidents renewed calls for working toward common macroeconomic goals adopted in 2000, before Argentina's economic crisis sent shock waves throughout the region. And Argentina proposed the creation of a monetary institute to coordinate policies and eventually design a single regional currency along the lines of the successful euro.