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Mercosur members enter summit with differing priorities and building pressure

Illustration for article titled Mercosur members enter summit with differing priorities and building pressure


The Mercosur regional summit scheduled to begin on July 29th in Caracas, Venezuela, is seen by many of its participants as one of the final opportunities to reach agreements that would secure the group access to international markets. However, public statements ahead of the meeting have been divided between pushing for expansion and adjudicating past decisions.


In comments prior to the summit, Brazilian officials have requested that the organization apply a zero tariff to trade with Peru, Colombia, and Chile, three of the four members of the neighboring Pacific Alliance. The zero tariff is set to be applied in 2019, but Brazil's request would see it applied at the beginning of 2015. According to comments from Antonio José Ferreira Simoes, Deputy Secretary General for South America at the Brazilian Foreign Ministry, the tariff fast track is aimed at deepening regional relations, increasing business integration - including the sale of manufactured goods - and creating jobs. From 2002 and 2013, trade between Brazil and Colombia grew by 300%, between Brazil and Peru by 400%, and between Brazil and Chile by 200%, added Ferreira Simoes.

Officials from Venezuela, which will pass the chair of the group to Argentina during the meeting, have also pushed for expansion. Venezuelan President Nicolás Maduro has said that during the summit the presidents will consider creating an economic forum between Mercosur, the Bolivarian Alliance of Americas Peoples (ALBA), and Petrocaribe, the latter of which is a petroleum supply association headed by Venezuela. ALBA and Petrocaribe are both made up of Central American and Caribbean states. The push for inclusion of ALBA and Petrocaribe comes as part of an effort to increase trade in the region and to bolster Venezuela's stature. As President Maduro himself has said, Venezuela has 'leadership and influence' in both organizations.


However, the government of Paraguay has voiced objections to several of the 183 resolutions passed by Mercosur while Paraguay was suspended as punishment for impeaching former President Fernando Lugo in 2012. Paraguay's objections include the admittance of new members Bolivia, Guyana, and Suriname. Paraguayan Deputy Foreign Minister Federico González, who announced the objection, was quick to stress Paraguay's affinity for the new members. Calling Bolivia a 'brother nation' with which it had many ties, González clarified that the resolutions in question were "…[decisions] made in our absence, and therefore, we need to look at how to make it legal and valid." His government, González added, would work to minimize or overturn any resolution that may harm its national interests.

The Mercosur summit comes at a fraught time for many of its members. Venezuela endured several months of political protests earlier this year, and is still dealing with currency imbalances, high inflation, and shortages of consumer goods that threaten to further destabilize the country. Argentina comes into the meeting aiming to secure further international backing in negotiations with recalcitrant creditors, and hopes to stave off a second default in less than 15 years. Brazil, Mercosur's largest economy, also needs a positive outcome from the meeting. Coming off a World Cup that was not received with enthusiasm domestically, and just two years from hosting the 2016 Olympics, President Dilma Rousseff needs to advance trade deals that will bolster Brazil's economy.


Brazil is also putting pressure on its fellow members to agree to trade terms with the European Union that could help revive the group. Negotiations conducted by Mercosur as a whole have bogged down for almost 15 years, while Pacific Alliance member states have all been able to conclude bilateral agreements with the EU. With leftist governments resistant to free trade deals, European subsidies that reduce market access for South American raw materials, and a potential agreement on TTIP between Europe and the U.S., many in Mercosur, particularly Brasilia, are concerned that a failure to come to an agreement in Caracas could lead to Mercosur's exclusion from global trade, and its continued stagnation.

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