Go Back

Brazzil - Economy - July 2004

Brazil Tries to Prevent War with Argentina

Brazil's Foreign Trade Minister, Luiz Fernando Furlan said it
would be a "bucket of cold water," if the Argentineans decided
to restrict imports of Brazilian textile goods. Furlan said that he
is optimistic and hopes the Argentineans refrain from applying
this and other restrictions threatened by Buenos Aires.

Gabriela Guerreiro


Picture Brazil hopes to resolve this week the diplomatic flap caused by Argentina's decision to impose restrictions on imports of Brazilian home appliances, on the eve of the Mercosur summit meeting.

According to the Minister of Development, Industry, and Foreign Trade, Luiz Fernando Furlan, the Argentinean restrictions will only take effect after they are regulated, which has still not occurred.

Since representatives of the Brazilian and Argentinean governments and appliance manufacturers will meet this week in Buenos Aires to discuss this matter, the Minister said that he is optimistic and hopes the Argentineans refrain from applying the restrictions.

"After this meeting, the Argentinean government will evaluate whether regulation will be necessary," Furlan pointed out.

According to the Minister, the President of Argentina, Néstor Kirchner, expressed willingness to negotiate with the Brazilian government over sticking points in trade between the two countries.

In two weeks, a new meeting between Brazilians and Argentineans will be scheduled for each side to expound its desires in the trade sphere, so that the two can seek common ground.

"The Argentinean government should present Brazil with the aspects it considers relevant to its development, and, from there, we shall try to discover points we have in common," Furlan said.

According to the Minister, the idea is to avoid trade disputes and search for amicable solutions to impasses. "We have to take a global view of the Mercosur, rather than remain sparring over temporary issues," Furlan argued.

In his opinion, Argentina felt that its industrial park needs refurbishing, since the country is growing, and the same thing is happening in Brazil—that is why the neighboring country decided to limit imports from Brazil.

Brazil's Minister of Finance, Antônio Palocci, endorsed Furlan's words. For Palocci, when the economy is growing, productive activities are reactivated, and it is natural for trade disputes to occur.

"It is important for a dialogue to exist between the governments. These controversies do not impede composing a ample negotiation," he said.

Furlan emphasized that the Brazilian government is not treating the trade dispute with Argentina with "emotionality." "Emotional discussion is always very impassioned," he said.

Palocci and Furlan, who were in Argentina for the Mercosur's summit, spent hours presenting figures on Brazilian home appliance exports to Argentina in recent months to the Argentinean Minister of the Economy, Roberto Lavagna. According to Furlan, these sales have been perfectly normal.

As for the threat made on July 7 by the Argentinean President, Kirchener, to impose restrictions on other Brazilian products, especially in the textile sector, Palocci had recourse to the Old Testament to define his point of view.

"Each day with its own tribulation," he commented ironically. In Palocci's opinion, it would be premature to discuss a question that hasn't even arisen yet.

For his part, Minister Furlan said it would be a "bucket of cold water," if the Argentineans decided to restrict imports of Brazilian textile goods. "Some months ago the Brazilian textile sector was the subject of an extensive process of negotiations. If the two countries fail to honor the commitments assumed in the negotiations, it would represent a bucket of cold water for us Brazilians," he admitted.

Lula Confident

President Luiz Inácio Lula da Silva affirmed that he does not consider Argentina's restrictions on imports of Brazilian household appliances a problem. "This is the result of growth in the economy and growth in trade relations between the two countries," the President declared at the conclusion of the 26th Summit Meeting of Mercosur Heads of State.

"God grant that other problems arise in consequence of our economic growth. What is important is for Brazil and Argentina to be aware that Brazilian industry and Argentinean industry need to grow," the President remarked.

Lula said that he confides in the efforts of the two countries' Ministers to resolve the problem.

Luiz also called for flexibility to overcome disagreements among the economic bloc's member countries. "Flexibility was and continues to be necessary to meet demands stemming from disagreements among the member States," he affirmed.

According to the President, in order to strengthen the customs union and construct the common market envisioned in the Assunción Treaty, which created the Mercosur, it is essential to deepen and expand the bloc in such areas as services and government purchases. For President Lula, the development of the Mercosur cannot be solely in national terms; it must have a regional dimension.

"Brazil's prosperity has to be the prosperity of our partners in the region. The Brazilian economy has entered the phase of solid growth. Conditions are in place to expand exchange and cooperation with our neighbors," he affirmed.

After praising the leadership exercised by Argentina, which occupied the temporary presidency of the Mercosur during the past six months, he recalled that, after 10 years of negotiations, the bloc is moving in the direction of integration with the Andean countries. "What seemed impossible is happening. The Mercosur is not indifferent to our Latin America," he remarked.

Lula expressed his satisfaction with the participation of Mexican President, Vicente Fox, in the encounter, and he said that he awaits that country's speedy entry into the bloc as an associate.

Chile, Bolivia, and Peru are already associated members. Mexico's entry still depends upon negotiations. Lula also highlighted the presence of Venezuelan President, Hugo Chávez, at the event.

The President mentioned the negotiations in which the Mercosur is engaged with India, South Africa, Egypt, China, and Japan, and he declared that Brazil is assuming command of the Mercosur with a sense of "responsibility and urgency."

For Lula, the Mercosur is more than just a project for the negotiation of tariffs and free trade among the member countries. He said that the bloc must take advantage of new and advanced fields of knowledge.

"In this respect, Brazil is willing to share with its Mercosur partners the benefits it derives from nuclear energy and space exploration."

Court for Disputes

From now on the Mercosur will have a court of last resort to judge trade disputes among the bloc's member countries (Brazil, Argentina, Uruguay, and Paraguay)—the Permanent Appeals Court. The organ was instituted at the 26th Mercosur Summit Meeting, which ended July 8 in Puerto Iguazú, Argentina.

The summit meeting gathered the heads of State and Ministers from the four countries and the three associated States (Chile, Bolivia, and Peru), as well as the Presidents of Venezuela, Hugo Chávez, and Mexico, Vincente Fox, who were there as official guests.

Up to now, when member countries disagreed over trade questions, the Court of Arbitration was called on to analyze the impasse. However, if a party was dissatisfied with the Court's decision, it had to direct its appeal to other international forums, such as the World Trade Organization (WTO).

With the Permanent Court, countries will no longer need to seek other venues for their appeals. The Court, which will be based in Assunción, Paraguay, should begin to function in the coming months, according to the Brazilian Ministry of Foreign Relations.

In addition to the Court, the Mercosur Presidents approved President Hugo Chávez's request to admit Venezuela to the economic bloc as an associate member. Venezuela's entry should be made official after its free trade agreement with theMercosur is registered with the Latin American Integration Association (ALADI).

Mexico also submitted an entry request, which received the backing of Brazilian President Luiz Inácio Lula da Silva. In his address at the Summit Meeting, President Lula pointed out that he and his Mexican colleague, Vicente Fox, acted together to begin negotiations for Mexico's membership in the bloc.

Some details of the free trade agreement between Mexico and the Mercosur have yet to be concluded. Therefore, Mexico will only be accepted into the bloc after the agreement is ready.

At the meeting, Brazil took over the temporary presidency of the Mercosur from Argentina, for a term that lasts six months. The bloc's heads of State will meet again in December, in Ouro Preto, Minas Gerais. On this occasion Brazil will pass the command of the bloc to Paraguay.

Democracy for Bolivia

President Lula urged Bolivia to take the path to democracy, calling it the best instrument for economic and political recovery. Last October, Bolivia went through a political crisis, which resulted in the resignation of president Gonzalo Sánchez de Lozada as a popular uprising raged throughout the country.

During a speech at a ceremony celebrating the signing of agreements with Bolivia, Lula declared that the decision by President Carlos Mesa (who substituted Sanchez de Lozada) to hold a referendum on the country's energy policy next week and municipal elections in December "will make it possible for Bolivia to discover what its population wants."

Lula went on to say that "At this moment, when Bolivia gathers strength, it can count on the friendship of the government and people of Brazil. That is the message we sent Bolivia last year during its crisis, and that is the message we send now. That friendship also underlies these agreements we sign today."

Lula concluded by saying that Latin America needs a "Bolivia that is democratic, prosperous and united... a country based on the dreams of Bolivar who wanted borders to bring people together, not separate them," said the Brazilian President.

Carlos Mesa endorsed those words, saying that democracy was the only mechanism that would enable Bolivia to get back on track. "We want democracy to be the crucial issue in our future," he declared, adding that he still intends to convoke a Constitutional Assembly.

Gabriela Guerreiro works for Agência Brasil (AB), the official press agency of the Brazilian government. Comments are welcome at lia@radiobras.gov.br.
Translated from the Portuguese by David Silberstein.

Discuss it in our Forum

Send your comments to Brazzil

Anything to say about Brazil or Brazilians? Brazzil
wishes to publish your material. See what to do.