MercoPress. South Atlantic News Agency
“Mercosur is not working”
“Mercosur in not working, but it can be recovered”, was the message of Argentine Economy Minister Domingo Cavallo during a conference in Harvard University where he graduated 25 years ago and his son is currently studying
Mr. Cavallo explained that the original idea of Mercosur to open markets and free trade was positive, and the relation with Brazil "politically useful", but then it became stagnant and the situation worsened.
"The 1994 Ouro Preto summit when a common external tariff was agreed, with the purpose of creating a customs union was not positive since Argentina and Brazil have different industrial conditions. It was not a good move", indicated Mr. Cavallo who told the audience he was speaking as an intellectual and not as a politician.
Mr. Cavallo recalled that in 1996 he proposed close macroeconomic coordination, particularly regarding exchange rates, but the Brazilians adamantly opposed the idea.
"Then in January 1999 came the Brazilian devaluation and to make things worse former president Menem began talking about the need to dolarize the whole area, which made dialogue virtually impossible with Brazil", underlined the Argentine official.
"Since then Mercosur has been in crisis, but it can be recovered if we concentrate in deregulating the services sector and in infrastructure and communications projects, as Brazilian president Cardoso has proposed". Mr Cavallo said that in these conditions the Mercosur project could be extended to include the whole of South America.
Further on Cavallo explained he favored bilateral trade agreements, "following the Chilean example, with an independent tariff and trade structure and holds discussions simultaneously with Mercosur, European Union, United States and Asia".
"Bilateral talks in multiple fronts, that is the formula", said Mr. Cavallo, "and that is how Mercosur as a block should confront Nafta countries and the US".
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