Brazilians Want Lula to Assert Leadership in the Face of Chavez at Summit

An agenda with several controversial issues awaits Mercosur summit this week in Rio do Janeiro where some in fighting can also be expected given the level of criticism to which the trade group has been exposed.

Leaders of the five full members (Argentina, Paraguay, Uruguay, Venezuela and host Brazil) have confirmed assistance and so have Chile's Michele Bachelet, Colombia's Alvaro Uribe, Bolivia's Evo Morales and recently inaugurated Ecuador's Rafael Correa.

One of the consensus issues which will be addressed, and some solutions offered, is junior members Uruguay and Paraguay disappointment with Mercosur functioning since they argue that in 16 years it has not delivered the expected benefits mainly because of restricted access to the markets of Brazil and Argentina.

These complaints, in technical jargon asymmetries, have pushed both Uruguay and Paraguay to attempt closer trade, and even political, ties with third parties, particularly the United States, which could result in a serious blow to the customs' union.

To face asymmetries the summit is expected to approve the first projects to be financed by the US$ 100 million Structural Convergence Fund, 70% provided by Brazil, 27% by Argentina and the remaining 3% by the two countries to benefit from the initiative.

Brazil also proposed several tariff modifications that should facilitate access to the Brazilian and Argentine markets for Paraguay and Uruguay, including a reduction in origin norms and elimination of tariffs on out of the region produce re-exported to the main markets.

However Brazilian government trade advisors fear that this could lead to the establishment of "Mexican-style maquilas" in Paraguay and Uruguay that could end flooding the Brazilian market with cheap imports.

The asymmetry issue has been particularly irritating since for the last several years Brazil has had a comfortable trade surplus with other Mercosur members, confirming its predominance and ignoring reiterated claims from junior members. Uruguay and Paraguay have anticipated that the proposals are "insufficient".

A more political controversy to be addressed is Venezuela's Hugo Chavez "path to Socialism" policies and his confrontation rhetoric towards United States which leaves Mercosur in an uncomfortable international position.

Brazilian president and host, Lula da Silva, is also facing considerable criticism at home for letting Mercosur drift and allowing other South American "radical" presidents take the stage and question Brazil's historic prevalence in the region.

The request from a close friend and ally of Chavez, Bolivia's Evo Morales to become a full member of Mercosur will also be considered. Argentina's Foreign Affairs minister Jorge Taiana stated that the acceptance of the request "will be the most important event of the summit", but Brazilian diplomatic sources have said that a special task force will be named to consider Bolivia's "manifest willingness" to integrate the group.

Finally, is the ongoing dispute between Uruguay and Argentina over the construction of pulp mills along a shared river, which has reached the International Court of The Hague and has seen several claims added to the original case. Argentina argues the pulp mills will contaminate and Uruguay is protesting the blocking of bridges leading to Uruguay by pickets which have caused great losses to the economy.

The dispute has turned at times acrimonious and Argentina and Uruguay's presidents, Nestor Kirchner and Tabare Vazquez although respecting protocol, are not in talking terms and try to avoid each other.

Before the summit Mercosur technical groups and several ministers will be meeting for the final details. Uruguayan Foreign Affairs minister Reinaldo Gargano announced he would be meeting his counterpart Jorge Taiana which means a change from Uruguay's rigid position that no bilateral dialogue was possible until pickets are lifted.

Maybe after all, some positive things could come out from this Mercosur summit.

Mercopress

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