Fed Up with “Dollar Tensions” Brazil and Argentina Step Up Trade in Local Currency

Argentinean peso In order to avoid being submitted to the "greenback's tensions," Mercosur, the South American economic market, is considering extending a "successful" Brazil/Argentina bilateral trade experience which sidelines the US dollar and privileges regional currencies to the rest of the group's full members, Paraguay and Uruguay .

Mercosur Finance and Foreign Affairs ministers plus Central Bank presidents held discussions in Montevideo in the framework of the biannual Mercosur's presidential.

"It is very important for us small countries, the vision of Argentina and Brazil on world financial events since they are active members of the G-20 group that is re-drafting financial rules," said Uruguayan Economy minister Alvaro Garcí­a.

"One of those issues is the sustained depreciation of the US dollar at world level and how the so-called central countries are going to act to address the international financial crisis, something which is fundamental on the short term but also on the medium term," added Garcí­a.

Argentine Economy minister Armando Boudou who also participated in the technical discussions, and will be a reference for the next six months with Argentina on the Mercosur chair, said that the Argentine/Brazilian experience of financing bilateral trade with local currencies has been "very successful" and "most learning", an experience "that will soon have the Uruguay/Brazil leg added to it".

Boudou said that Argentina's bilateral trade with Brazil in local currencies had been steadily growing at 15%, "still modest, but sustained", which is "encouraging". He added that while international trade with the rest of the world had tumbled 45%, "trade among Mercosur members was up 20%" which means "we are on the right track of a good strategy".

"This is an issue, paying for trade in local currencies, which as a trade block will have great preponderance. From now on we are going to give this proven initiative a great boost since our countries have been submitted too long to US dollar tensions and we have the tool with our local currencies to promote trade and businesses," added the Argentine minister.

"I'm convinced all Mercosur members will finally sign based on the Argentine Brazilian experience, since it will help strengthen integration with an instrument that has helped overcome the challenges of the international crisis".

Argentina's Foreign Affairs minister Jorge Taiana talked about another vital issue for Mercosur: negotiations with the European Union to finalize a trade agreement hopefully in the first half of 2010 when Argentina will be holding the Mercosur chair and Spain will be presiding over the EU.

"What is most significant is the willingness to advance in Mercosur/European Union negotiations," which makes it particularly important in the framework of the international crisis and in "the need to achieve a productive integration in difficult years as we are going through."

However Taiana was also cautious, "we're still quite distant. I believe we must continue to advance and retake negotiations specially when there are coincidences from both sides that this is the moment."

Cooperation negotiations with the EU were first launched in 1995, in Madrid, but have since remained stalled in spite of the several efforts to re-launch them. At the time the ambitious agreement covered not only trade but also politics, culture and foreign affairs consultations.

MP

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