Mercosur target: single market by 2006.

<a href=www.falkland-malvinas.com>MercoPressSur Thursday, 19 June

Under the undisputed leadership of Brazil and Argentina, Mercosur members, associate members Chile and Bolivia, and as special guest Venezuela, the South American trade block celebrated the XXIVth presidential summit in Asunción, Paraguay with the commitment to strengthen the political agenda and expand regional integration creating a genuine single market by 2006.

Presidents present at the summit in Asuncion - Paraguay In the final joint declaration Argentina, Brazil, Paraguay and Uruguay stressed the need to generate a new “negotiation thrust” to make effective regional economic integration and scheduled an extraordinary Mercosur Council meeting for mid October to assess progress on the initiative.

The proposal to consolidate Mercosur as an only market by 2006 has a strong political connotation since the United States sponsored Free Trade Association of the Americas, FTAA, a project that includes 34 countries in the three Americas, is scheduled to begin in 2005.

“Choosing 2006 for the consolidation of Mercosur is not a political move”, said President Kirchner adding that “I’m not a fundamentalist but I believe we should first consolidate Mercosur without dismissing the European Union, United States or any other country”.

“FTAA should start in 2005 although the timetable will be determined by reality and not a simple calendar decision”, cautioned Mr. Kirchner.

Earlier in the meeting Brazilian president recalled that “presidential elections in Brazil, Argentina and Paraguay clearly indicate that our electorates favor Mercosur; we proposed Mercosur as a priority and the electorate approved, so we are now in the midst of a new political scenario far more inclined and determined to the task of regional integration”.

“Mercosur has lacked political dimension, believing it was enough with economic models, and in this context we are proposing the creation of a Mercosur parliament chosen by direct vote, to make Mercosur really democratic and with a human dimension”, remarked the Brazilian president.

Argentine president Nestor Kirchner emphasized the need of a “democratically transparent Mercosur, capable of solidarity that expands with equality and social justice” openly supporting the initiative of a regional Parliament and a Mercosur with growth mentality, “that facilitates the access of other countries of the region”.

President Kirchner indicated that the consolidation of a free trade zone and perfecting a customs union needs of a strong political-economic foundation in line with “mutual trust and a clear definition, beyond any doubt, of common objectives”.

However the idea of a regional Parliament and expanding Mercosur was received with certain caution by the group’s smallest country members, Paraguay and Uruguay who have suffered considerably the impact of a too close dependency of Mercosur “big brothers”.

But to sweeten the proposal Brazilian president Lula da Silva publicly admitted “it was essential to contemplate the productive and economic asymmetries of the smaller members” insinuating the possibility of special compensations.

Another chapter of the meeting was dedicated to the coordination of macroeconomic targets, one of the weakest points of Mercosur twelve years existence that almost floundered the project in January 1999 when the unilateral Brazilian devaluation, and again in 2000/2001 with the collapse of the Argentine economy and its fixed exchange rate policy tied to the US dollar.

An immediate target is recovering intra Mercosur trade volume to 2001 levels. Long term objectives are a foreign debt/ Gross Domestic Product ratio equivalent to 40% by 2010; a maximum 3% budget deficit beginning 2004 and 5% inflation as of 2006 when the single market is consolidated.

Argentina proposed the creation of the Mercosur Monetary Institute that would be authorized to issue the equivalent of a billion US dollars or 3% of the current monetary base of Brazil and Argentina, as a first step towards a single currency for the area.

Regarding international trade Mercosur and associate members Chile and Bolivia made public a release demanding developed countries, particularly the European Union, the liberalization of agricultural commerce.

The presidents appealed to developed countries “to adopt measures that facilitate advancement in the liberalization of agricultural trade”, as well as a quick approval of the “EU Common Agriculture Policy review”, making it easier to overcome the current stagnation of the Doha Multilateral Trade Round, and enhancing prospects for the World Trade Organization meeting to be held next September in Mexico.

Advancement must translate in “better access conditions for agricultural production and exports from developing countries” highlighted the release.

Hugo Chávez, president of Venezuela participated in the summit as a special guest given his country’s determination of becoming a member of Mercosur. Venezuela belongs to the Community of Andean Nations, CAN, the block of South America’s Pacific countries (Colombia, Ecuador, Peru, Bolivia and Venezuela) that Brazilian president Lula da Silva wants to fully integrate.

Presidents present at the summit were, Nestor Kirchner from Argentina; Lula da Silva, Brazil; Jorge Batlle, Uruguay; Luis Gonzalez Macchi, Paraguay the host country; Ricardo Lagos, Chile; Gonzalo Sánchez de Losada, Bolivia and Hugo Chavez from Venezuela.