MercoPress. South Atlantic News Agency

Trade in local currencies instead of US dollar, Mercosur proposal

Mercosur summit has a long agenda of issues to address in Paraguay

Mercosur presidents will consider this week during the summit in Paraguay, the possibility of using local currencies to finance inter-region trade, revealed the host country’s president Fernando Lugo.

The proposal is to extend to all Mercosur associate members the initiative from Argentina and Brazil that in 2008 began tentative experiences to replace the US dollar for their local currencies in bilateral trade.

The idea is to also include Paraguay and Uruguay, the other full member of the group, agree on established exchange rates for the different currencies leaving aside the US dollar as a reference, added Economic and Integration relations Deputy Minister, Oscar Rodriguez Campuzano.

According to Campuzano there’s an understanding between the four full members for the initiative to be approved during Friday’s Mercosur presidential summit to be held in Asunción, and when Uruguay takes the chair for the next six months from Paraguay.

Lugo also anticipated that the presidents will continue to consider the elimination of the double Common External Tariff, AEC, an initiative which would allow the group to advance towards a customs union. Paraguay however still has some doubts about the functioning of the system, particularly sharing customs revenue.

With the elimination of the double AEC, merchandise circulating inside Mercosur would have to pay only once, when introduced into the region and not at final destination.

Other issues in the Mercosur agenda include the A/H1N1 flu virus for a coordinated regional address to the pandemic; harmonizing stock exchange regulations; signing a document for the promotion of trade and investments between Mercosur and Southern Korea and a strong support for the ousted Honduran president Manuel Zelaya.

Besides leaders from the four full members, Asunción will also host Venezuela’s Hugo Chavez, (in the process of incorporation to the group); Michelle Bachelet from Chile; Evo Morales, Bolivia and Rafael Correa from Ecuador.