MercoPress. South Atlantic News Agency

Crucial week for Mercosur

Crucial week for Mercosur

A crucial week for the long term stability of Mercosur will be held this Tuesday in Sao Paulo when Argentina and Brazil's Ministers of Finance and Foreign Affairs meet to discuss details of the Common External Tariff, AEC, and the constant depreciation of the Brazilian currency that so far this year has reached 45%.A second as important but more technical meeting begins this Monday in Montevideo where the Mercosur Common Market Group must finish drafting a proposal for the trade discussions at the end of the month with the European Union.Last July the European Union presented Mercosur a free trade zone proposal with a ten years timetable and total tariff reduction in 90% of bilateral trade.The proposal establishes three main areas: goods (including agriculture); services and government purchasing, with tariff reductions for agricultural commodities and industrial goods in four different categories and time periods: immediate, four, seven and ten years.

In Sao Paulo, Argentine Economy and Foreign Affairs ministers, Domingo Cavallo, Rodríguez Giavarini will meet their counterparts, Pedro Malan, Celso Lafer and Brazilian Foreign Trade minister Sergio Amaral.

"What we need is flexibility, flexibility to overcome the current adverse circumstances and then keep advancing as a block", said Mr. Amaral who emphasised that is was not in the interest of any of the members to give "a demoralizing perception of Mercosur and the AEC discussion" to our trade partners, investors and financial markets.

Mr. Cavallo has insisted in the elimination of the common external tariff arguing it hinders Argentina's costs and export efforts, while the permanent erosion of the Brazilian currency can be interpreted as a "deliberate policy".

Brazil reacted furiously to these allegations and pointed out that the country's exchange rate policy is "fluctuating" while Argentina has a fixed one peso-on dollar exchange rate. However Brazilians have anticipated they are willing to consider "temporary suspension", but not elimination of the AEC.