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Amid Recriminations Among Members Brazil Convenes Mercosur Council

Mercosur countries Brazilian capital BrasÀ­lia will host this Monday, October 27, the Mercosur Council, which is scheduled to address an agenda of controversial issues including: the global financial crisis, commercial asymmetries among country members and Uruguay's veto to former President Nestor Kirchner's for the chair of Unasur.

Finance and Foreign Affairs ministers plus presidents of Central Banks from Mercosur full and associate members are scheduled to exchange ideas about the ongoing global crisis, how to address it and if there is latitude for some regional coordination.

Paramount is also the coming November 15 Washington meeting to be hosted by US President George Bush, the first of a round of consultations hopefully leading to the re-launching of a new global financial system. Argentina, Brazil and Mexico have been invited to Washington.

The Mercosur Council VII extraordinary meeting was convened by Brazil which currently holds the group's pro tempore presidency

One of the more immediate effects of the global crisis refers to Argentina's position in trade terms, which is geared to "protect" local sensitive industries with the establishment of "filters" and an alarm system to avoid saturation of the local market, according to the Buenos Aires press.

Among the imports on the watch list are mainly Chinese products but also some from Brazil, particularly textiles and foot wear, fearing they could he highly pernicious for the Argentine industry, particularly since the Brazilian currency has lost 35% of its value since the beginning of the financial crisis.

However since Argentina and Brazil have a "strategic alliance" and Brazil is a major player in global trade affairs and in the coming round to reform the financial system, it's hard to see Buenos Aires adopting unilateral decisions. A bilateral "consensus mechanism" can be expected to be reached.

Another uncomfortable issue is the latest controversy between Uruguay and Argentina, referred to the veto imposed on Mr. Kirchner, who has been proposed as chairman of the Union of South American Nations.

Uruguay objects Kirchner's attitude during the on-going conflict over the Botnia pulp mill and pickets blocking bridges leading from Argentina to Uruguay.

"How can you trust Mr. Kirchner, when as president he was unable to ensure the free circulation of people and goods between country members, as consecrated in the Mercosur charter?" argues Uruguay.

Argentina has reacted describing Uruguay's position as "injurious" for the Argentine people, for Argentina and for Unasur members who proposed Mr. Kirchner's candidacy.

Foreign Affairs ministers are also expected to define the group's position for the coming Ibero-American summit to be held at the end of the month in El Salvador, Central America.

Mercopress

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  • ch.c.

    Among the imports on the watch list are mainly Chinese products but also some from Brazil, particularly textiles and foot wear, fearing they could he highly pernicious for the Argentine industry
    Great help for negotiations later at the WTO !!!!!

    You all prove once more that you want developed countries to open more their doors to you (emergings nations) despite you already have a large trade surplus with these developed nations-
    But of course ALL of you want to protect imports NOT ONLY against developed nations but even against YOUR “friends” the other emerging nations !
    Better yet, against developed nations you FORCE them to set up plants IN YOUR COUNTRIES IF THEY WANT A REGULAR TAX INSTEAD OF A STIFF IMPORT TAX.
    But….but…but….you are unwilling to to do the same and invest in both developed and emerging nations.

    In my humble view that would become a major theme during the next decade.

    Afterall the unemployment rate is nearly as high in Europe and the USA than in some emerging nations.
    Why should then develop nations continue to lend you money or invest in your countries, when that money and loans is also needed now in their own countries ???????
    It doesnt mean that there will be No lending, but smaller lending and higher lending rates !
    Furthermore, the world equities being down as much as they are, also have the effect to create an opportunity for HIGH returns long term.
    Then why invest elsewhere.

    Just think about that one :
    What happened AFTER the 1982 recession ? Emerging nations currencies meltdown !
    What happened AFTER the 1990 recession ? Emerging nations currencies meltdown !
    What happened AFTER the 1998 LTCM meltdown ? Emerging nations currencies DEVALUATIONS (ONLY) rather than currencies real meltdown !!!!!

    But during these currencies meltdown, the emerging nations did not necessarily had an economic recession, but usually mostly a relatively low economic growth rate but they devalued their currencies to keep the export growth rate…in Local Currencies !

    Therefore the impact was somewhat limited internally, but…but…but… when measured in US$ your GDP wealth came down sharply !!!!!
    And it already started in 2008.

    Thus believing the wealth gap between developed and emerging nations will continue to be reduced is just an……. HERESY !

    The gap will GROW again !!!!!

    Or said otherwise, for the time being GOOD BY TO THE BRIC and el al….THEORY !!!!!!

    The BRIC theory came from Wall Street just as the the junk debts they issued and rated AAA !!!!!!

    Last but not least :
    Is Brazil so sure they wont have their lowest investment grade…DOWNGRADED !!!!!
    That would mean you may go to where you came from not so long ago : JUNK(IES)

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