Brazil ‘trapped and isolated’ in Mercosur, should try trade agreements with US, says former president
Former Brazilian president Fernando Henrique Cardoso said it was convenient to consider a trade integration with the Unites States given the very modest advances with Mercosur, where open trade has stalled or is far less than was expected when the original idea and is subjected to protectionist lobbies.
Cardoso who ruled Brazil from 1995 to 2002 and set the foundations for the current monetary and financial stability enjoyed by the country, said that “we were always afraid” of an integration with the US inside the Free Trade Association of the Americas, FTAA, a project strongly propped by Washington and the Clinton and Bush administrations and which encompassed all countries of the hemisphere with the exception of Cuba.
The former Brazilian president admitted with a strong quota of self criticism that for years “we cooked the idea with a very low fire and never actually moved to strengthen the idea of an FTAA”. The project finally succumbed in November 2005 at the Summit of the Americas in Argentina, when Lula da Silva was Brazil’s president.
At the Mar del Plat meeting, host president Nestor Kirchner and ally Hugo Chavez from Venezuela, together with the passivity of Brazil torpedoed the project and humiliated President Bush.
Looking back into history Cardoso asked, “maybe it’s time we review the situation and think if we are not in better conditions to assess with more latitude and ask ourselves what do we win and what do we lose with an FTAA?”
“We finally didn’t have a FTAA and after all we did not advance much” as was hoped but at the same time “we are trapped and isolated with Mercosur”, said Cardoso who added that the path to follow is that of Chile with its ‘globalization’ model opened to the world and trade agreements with as many partners as possible.
Unfortunately “Mercosur instead of advancing towards an effective efficient liberalization became prisoner of a system dominated by protectionism, sometimes by Brazil, but most of the time by Argentina” and its industrialization plans with a trapped market of 40 million unexposed to a healthy competition and subject to the different lobbies.
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33 comments Feed
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You are talking nonsense.
If you were truly a US citizen you would surely see the benefit from trade with the US. Since you are an RG troll, you are jealous that Brazil is so much better off than Argentina, so will say and do anything to upset the apple cart.
Mr Cardaso is looking at things from a sensible point of view.
South American solidarity is one thing, but Mercosur is a rotten apple, that doesn't even follow its own rules, and appears to be dominated by Argentina, and very soon by the illegally incorporated Venezula.
In the future they won't just be discussing trade, they'll be dictating the terms of those trade agreements, and finally dictating what a member country can or can't do.
Look at how they've back-stabbed Paraguay. And for what? Because they impeached their President, followed THEIR constitution, and are now being 'punished' because the other countries don't 'like' the new President.
That is the future of Mercosur, to make it easier for countries like Venezula and Argentina to impose their will on other smaller countries. It's a pity that Dilma has bought into this.
All Brazil can do now is hope that you can contain matters, but I wouldn't be hopeful.
Mr Cardaso also makes a good point that if there is no competition between companies and countries, then the consumer won't necessarily get the best value for money. In fact, the products are likely to be crap in a closed market because why should the manufacturers bother making quality products when they have a captive consumer client base?
Hopefully Dilma will listen with an open mind to the opinions of her former peers, and make some sensible decisions. Especially as Brazil is on the cusp of becoming a major world power, economically, and it would be a shame to see them stopped from achieving their full potential by other members of Mercosur.
You all sound like “true believers” in an economic system called “free trade”. It doesn't exist. The entire market is rigged in favor of those who have curried favors from the powerful, and owe their allegiance back to them. Do not be deluded.
Then again, maybe you all are just trolls from the US Chamber of Commerce. Now that would make sense.
Personally I would hate to see Brazil end up like Argentina. And so, if we are not to be “deluded,” then what are you suggesting? Your chance to preach to the faithful............
This is just another example. You will not get any sense from him / her.
Seems to me that the former President is just stating the blindingly obvious.
Who can deny that Mercosur is populated by the nutjobs of the region?
LEP
South American solidarity is one thing, but Mercosur is a rotten apple, that doesn't even follow its own rules, and appears to be dominated by Argentina, and very soon by the illegally incorporated Venezula.
So where does Brasil fit in with this scenario you've conjured up.Brasil's
a puppet of Argentina is it?
LEP
In the future they won't just be discussing trade, they'll be dictating the terms of those trade agreements, and finally dictating what a member country can or can't do.
That's a guess.
LEP
Look at how they've back-stabbed Paraguay.
Mercosur you're saying,and not Paraquay?
LEP
Mr Cardaso also makes a good point that if there is no competition between companies and countries, then the consumer won't necessarily get the best value for money
Is the EU producing poor quality goods for its closed markets
What are all these various trade blocks if there is free trade.
Little protectionist clubs,aren't they?
It's no different to what happened in Yugoslavia.
You don’t say!
Rylang
It has nothing to do with being a “true believer”, it has to do with being practice and seeing what works. As Mr Cardoso points out, Chile took the approach of building trade agreements with dozens of countries around the world. It is eminently sensible to diversify your client base. Of course this benefits the few, but it has also benefited the many (the few are just fine whatever you do). Obviously there are benefits if Brazil can successfully integrate the region, but it is a slow process and full of obstacles (Argie protectionism, Venezuelan politics, Paraguayan “coups”, etc). Cardoso is right to say that Brazil should think more globally.
The UK/France made a similar mistake with the EU. To say, look here we have a market of 400million is fine, but what happens when that market runs in to problems. The Brits/French are now frantically trying to establish trade with India, China, Brazil, etc. Brazil would be wise not to put all her eggs in the Mercosur basket.
US is hardly going to be “dumping” anything agricultural on a country that has just quadrupled its farming base.
Secondly, Free Trade Agreements such as NAFTA, have restrictions AGAINST government subsidies by member states, to prevent unfair competition or “dumping”.
Why should the growing economic engine of LATAM agree to protectionism and restrictions that will limit its trade and hold it back with faltering economies like Argentina's???
As usual you try to twist my words, but actions speak much louder than words.
The UK trades within the EU, but we also trade with countries outside of the EU.
Mercosur are proposing only trading with each other, especially in the manufacturing base, so I stand by my posts.
Brazil has the potential to be a truly great nation, it doesn't need unnecessary red tape entangling it, especially when you have failing economies, such as Argentina's threatening to pull the rest of Mercosur down with it. Venezula hasn't got deep enough pockets to keep funding CFKs economic model. Sooner or later the economic axe will fall.
Of course it doesn't have to happen like that. If your government had actually shown some good faith towards the people it owned money too, and not stolen YPF off Repsol, people would be lined up to invest. It may not be too late to avert disaster, but it's getting very close to being too late.
“Mercosur are proposing only trading with each other” - that is not really true. Mercosur, like the EU pretends to use collective weight to leverage concessions with EU/US etc. Mercosur should look to the EU to see exactly what it shouldn't do.
17
Leiard: QFT
Yuleno
“Is the EU producing poor quality goods for its closed markets”
No, but Mercosur is. The EU has intense internal completion in manufacturing, add to that FTAs with countries like South Korea and you have more than enough completion to stay competitive. The result: just look at the cars they make. In Mercosur completion is weak. The result: just look at the cars they make.
out of Europe,
I go with-
“Mercosur are proposing only trading with each other” - that is not really true. Mercosur, like the EU pretends to use collective weight to leverage concessions with EU/US etc. Mercosur should look to the EU to see exactly what it shouldn't do.
But where these types of blocks and so-called free trade fits is what needs clarifying.That type of deal is what the USA would want Brasil to get into.But the USA would dual source and that would be detrimental to Brasil.Its better off with mercosur and the BRIC countries.
LEP likes to make guesses so that is my guess based on education and history that I am aware of.So LEP in what way have I twisted your words when I extensively copied and pasted them and made short comments on them.Your words speak for themselves.
We will never sign a free trade agreement with the EU either, so they can forget negotiations on that end also.
We don't want the (mostly) shitty products they try to dump on our market with HUNDREDS OF BILLIONS in subsidies, bailouts, and “health” barriers.
Your point???
Argentina won't sign ?? So what???
Brazil should pursue whats good for Brazil, with or without Argentina and Mercosur.
Truth is
You Are.
“But the USA would dual source and that would be detrimental to Brasil.” - but it wouldn't. Brazil has more growth potential than the US and growth potential is a powerful leverage because this is where the returns are. In other words, Brazil would be able to negotiate a beneficial trade agreement with the US.
It doesn't make sense to set the US apart from the BRICs. The best scenario is to increase trade with all of them (and everyone else too).
26
Toby
I would be interested to see how viticulture would keep Mendoza “booming” without any trade agreements. The EU currently allows Argie wine in based on current Mercosur-EU agreement. Argentina’s current trade restrictions jeopardise that. If Argentina were to walk away you could say goodbye to the wine industry.
I have to disagree.When it comes to manufactured goods,they can be produced anywhere and therefore bought from anywhere.And as soon as USA invests elsewhere it can buy from elsewhere.All the big guns of neo-liberal economics are in the USA.To build an alternative economy Brasil needs to stay away from deals with them.New types of corporations need to be fostered and Brasil is in a good position to be at the heart of their development.The wealthiest countries benefit the most from bi-lateral agreement.Brasil benefit from a united South America especially in the foreseeable future and the USA and Europe need to share more of the wealth created.They can start by paying tax in the country where the wealth is created and not where the capital comes from.
Get some sleep or get out more.You are starving your lung of oxygen and the body needs it or your brain won't work.
Well it is not working anyway is it.
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