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Even Absent from Summit Chavez Gets Lots of Attention from Brazil and Mercosur

Venezuela president Hugo Chavez A pilot experience between Argentina and Brazil regarding trade in local currency, reduction of asymmetries between senior and junior members and the official creation of the Bank of the South figure in the agenda for this week's Mercosur summit in Paraguay.

The summit is scheduled to begin Wednesday, June 27, with the meeting of the block's Foreign Affairs and Economy ministers and will end Thursday with the presence of the leaders from host Paraguay, President Nicanor Duarte Frutos; Argentina's Nestor Kirchner, Brazil's Luiz Inácio Lula da Silva and Uruguay's Tabare Vazquez.

Evo Morales from Bolivia and Chile's Michelle Bachelet are also expected to be present as Mercosur associate members. However Venezuela's president Hugo Chavez apparently will be absent since he has a scheduled trip to Russia.

"Trade transactions between Argentina and Brazil will be implemented experimentally in local original currencies during the first stage, although not extensive to all operations," said Argentina's Deputy Secretary for Economic Integration, Eduardo Sigal.

Another issue is addressing asymmetries, a contentious issue to which Brazil seems more willing but which Argentina has so far rejected. Paraguay and Uruguay have bitterly complained that Mercosur has become a "two members club", with decisions limited to senior partners. Besides in spite of agreements, Argentina and Brazil have limited access to their markets of Uruguayan and Paraguayan exports.

The Venezuelan sponsored development Bank of the South, supposedly to complement and eventually replace such multilateral organizations as the World Bank and the IMF will also be on the table and an announcement from Uruguay regarding its incorporation is expected.

On more practical issues, tariffs "technical" issues will be addressed such as avoiding double taxing on goods imported from outside Mercosur, but at the same time an effort will be made to "unify" tariffs on footwear and textiles, two sensitive industries mainly for Brazil.

An effort will be made to unify Customs Codes criteria and have all the different Custom Houses interconnected. Complementary to these effort member countries will discuss about the distribution of customs' revenue generated from tariffs imposed on goods imported to Mercosur.

On the political side, members will try to advance in Venezuela's formal incorporation process, which is still pending approval from the Paraguayan and Brazilian senates.

On Thursday Paraguay will formally hand over the Mercosur six months chair to Uruguay.

Meantime in Montevideo the Mercosur Parliament is scheduled to hold a two days controversial session that will consider Venezuela's incorporation and the Hugo Chavez administration respect for freedom of the press and what this could mean for the block's relation with other countries and democratic governance and stability.

Chavez decision not to renew Venezuela's oldest television station RCTV, which went off the air this month, has generated massive protests in the country and resolutions in most of Latinamerica's parliaments condemning the decision. In the midst of the discussion Chavez called Brazilian senators, "Washington parrots", and "oligarch exploiters of the Brazilian people".

The Brazilian delegation has anticipated its determination to have the issue discussed.

Uruguayan analysts forecast that the confrontation between Brazil and Venezuela will worsen before it improves because among other things the European Union has clearly stated that its priorities are "Brazil and Mexico" because it does not wish to have "Chavez as the other party" in trade and political discussions.

"Mercosur must decide its ideological course and political insertion," said Uruguay's former Foreign Affairs minister Sergio Abreu who added that the Chavez administration's protectionism, interventionism and conflict hypothesis and arms race, are on route to a serious political confrontation.

With Venezuela Mercosur has incorporated "a strategy of de-fragmentation, intervention and conflict", underlined Abreu.

Mercopress

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