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NAFTA & Inter-American Trade Monitor
Produced by the Institute for Agriculture and Trade Policy
Friday, November 15, 1996
Volume 3, Number 22
A draft World Bank report criticizing Mercosur for distorting international trade by favoring its own capital-intensive industries and raising high tariff barriers to external manufacturers of products such as cars, buses, and agricultural machinery has caused a continuing political storm. Although the draft report was leaked in October, the World Bank did not release the report and instead publicly defended Mercosur as "an important and positive initiative" that has boosted internal trade and attracted increased foreign investment.
Mercosur, and especially Brazil, dominate Latin American discussions of trade agreements and of the proposed Free Trade Area of the Americas (FTAA). The four Mercosur members Argentina, Brazil, Paraguay and Uruguay were joined by Chile on October 1, despite strong opposition by Chilean farmers. The five members of the Andean Community Bolivia, Colombia, Ecuador, Peru and Venezuela have also launched negotiations for a merger with Mercosur. Bolivia has already reached an agreement with Mercosur that will become effective on January 1, 1997, over the objections of Bolivia's agroindustrial sector. Mexico and Mercosur are negotiating a preferential trade agreement to replace bilateral agreements between Mexico and each of the Mercosur member countries. Mexican Commerce Secretary Herminio Blanco predicts that Mexico and Mercosur will negotiate a free trade agreement in 1997. Outside Latin America, Mercosur is also negotiating trade agreements with the European Union and the Community of Independent States, the alliance of former Soviet Union republics.
Without fast-track negotiating authority from Congress, the U.S. Clinton administration is handicapped in pursuing FTAA negotiations and virtually blocked from negotiating any other trade agreements with Latin American trade blocs or individual countries. That leaves Mercosur, dominated and led by Brazil, in a position to influence free trade negotiations in the Americas.
Guy de Jonquie'res, "World Bank Softens Criticism of Mercosur," JOURNAL OF COMMERCE, October 29, 1996; "Chile Joins Southern Cone Common Market as Andean Nations Agree to Multilateral Free-Trade Negotiations With Mercosur," NOTISUR, October 4, 1996; Abraham Lama, "Andean Community Gives Top Priority to Mercosur," INTERPRESS SERVICE, October 11, 1996; Juan Carlos Rocha, "Bolivia's Business Sector Rejects Mercosur Merger," INTERPRESS SERVICE, October 15, 1996; "Mexico-Mercosur Talks Could Conclude Within Months, Lampreia Says," INSIDE NAFTA, October 2, 1996; Kevin G. Hall, "Mexico and Mercosur Set to Exchange Product Lists," JOURNAL OF COMMERCE, October 28, 1996; Mario Osava, "Integration Beyond Trade," INTERPRESS SERVICE, October 14, 1996; Scott Otteman, "Mercosur Plan Should End Worry of FTAA Delay Tactics, Official Says," INSIDE NAFTA, October 2, 1996; "A Survey of Mercosur: Remapping South America," (special section) THE ECONOMIST, October 12, 1996.
NAFTA & Inter-American Trade Monitor is produced by the Institute for Agriculture and Trade Policy, Mark Ritchie, President. Edited by Mary C. Turck. Electronic mail versions are available free of charge for subscribers. For information about fax subscriptions contact: IATP, 1313 Fifth Street SE, Suite 303, Minneapolis, MN 55414. For information on subscribing to this and other IATP news bulletins, send e-mail to: iatp-info@iatp.org. IATP provides contract research services to a wide range of corporate and not-for-profit organizations. For more information, contact Dale Wiehoff at 612-379-5980, or send email to: dwiehoff@iatp.org.