Nobody is saying Mercosur itself will be killed off. But with its biggest members at each other's commercial throats, whether the institution survives is of not much more than academic interest. The common market as original proposed has long been dead in the water ), then you know something is not quite right in the Mercosur 'hood.
enjoy the article below:
"I don't know what Argentina will do. I believe Brazil will have to reconsider Mercosur." That's what the head of Brazil's pork exporters' association told Reuters after Brazil imposed non-tariff barriers on several perishable products including wheat flour and wine.
While the rules apply to products from anywhere they will hit Argentina hardest. They come as Buenos Aires is pulling every string it can to reverse its trade deficit, including forcing importers to become exporters too and raising barriers against Brazilian goods. It is all making Mercosur, the supposed common market, look like a nonsense.
As the 1991 Treaty of Asunción puts it, the primary objective of Mercosur is to establish "the free movement of goods, services and factors of production" between its member countries: Argentina, Brazil, Paraguay and Uruguay.
As former Brazilian president Fernando Henrique Cardoso put it last week, "Mercosur got stalled at the start and did not advance much." Its founders, he said, were thinking of something along the lines of the European Union and didn't get beyond setting up a common external tariff.
Even within its boundaries, though, Mercosur has not done much for trade. As the FT reported a year ago:
In the past decade, trade within Mercosur has grown less than among [Latin American] countries outside it, or even between individual Mercosur members and other Latin American countries.
Things have only got worse since then. This from the FT this month:
The tit-for-tat measures have reduced trade. In April this year, Argentine imports from Brazil fell 23.2 per cent compared to a year earlier, while Argentina's exports to Brazil have also fallen 9.7 per cent.
Even so, Mercosur still has ambitions beyond its original four-member grouping. Venezuela was accepted as a member in 2006, though Paraguay has refused to ratify its accession ever since. Chile, Bolivia, Colombia, Ecuador and Peru are all "associate" members. But the most recent talks on enlargement, at the end of last year, predictably got nowhere.
Even less likely to be realised is the long-held ambition of a free trade agreement with the European Union. Desultory talks have been dragging on for years. It has always been hard to imagine anyone in Brussels taking the proposal seriously. Argentina's renationalisation of YPF, the oil company hitherto controlled by Repsol of Spain, was surely the last nail in that idea's coffin. It seems almost as far-fetched today as the idea of a single Mercosur currency.
Nobody is saying Mercosur itself will be killed off. But with its biggest members at each other's commercial throats, whether the institution survives is of not much more than academic interest. The common market as original proposed has long been dead in the water.
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