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Six South American Leaders Convene Summit

Friday, December 6th 2002 - 20:00 UTC
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Six South American presidents convened a summit of the continent's largest trading bloc Thursday, aiming to work out a timetable for a free trade agreement covering most of the continent.

A key issue at the two-day summit ? taking place amid political and economic turbulence in the region ? was a schedule for eliminating tariff barriers between the six Mercosur countries and five other South American countries that belong to the Andean Community trading bloc.

Closer cooperation between the two blocs could give South America more muscle in U.S.-led negotiations for the Free Trade Area of the Americas, which would create a free trade zone stretching from Alaska to Patagonia by 2005.

The Mercosur presidents, who met behind closed doors Thursday, were also expected to formalize a plan to allow people to work in member countries and more easily obtain citizenship.

But turmoil distracted from discussions. Financial chaos in Argentina and currency problems in Brazil have dragged the Mercosur region into crisis.

The trading bloc ? Brazil, Argentina, Uruguay and Paraguay ? has a combined gross product of almost $1 trillion. Chile and Bolivia are associate members. On Thursday, traders pushed the value of the Brazilian real down to a five-week low of 3.77 to the dollar.

Investors in South America's largest economy are nervous about inflation while firms are having to pay burgeoning debts in dollars. There are also concerns about President-elect Luiz Inacio Lula da Silva's delay in appointing key economic officials.

News that Paraguayan president Luis Gonzalez Macchi faces impeachment on charges of corruption sent ripples of concern among delegates at the summit.

Brazilian Foreign Minister Celso Lafer underlined that "there is a democratic clause characterizing Mercosur. That means full respect of the democratic rule."

Mercosur has used its power before to ensure that democracy prevailed in Paraguay. Countries that do not comply with the organization's democracy rule face the threat of being expelled from the trade bloc.

Paraguayan President Luis Gonzalez Macchi, who was attending the summit, told reporters Thursday the allegations against him ? that he once owned a stolen luxury automobile and mishandled millions of dollars in state funds ? were politically motivated and he was ready to face Paraguay's parliament.

Gonzalez Macchi also said the summit's final declaration Friday will address the political chaos in Venezuela and the crisis in Argentina.

Venezuelan President Hugo Chavez had intended to sit in on the summit but was forced to cancel because of a general strike at home aimed at ousting him from power.

Venezuela, Bolivia, Colombia, Ecuador and Peru belong to the Andean Community.

Outgoing Brazilian President Fernando Henrique Cardoso hosted the summit, but visiting presidents also met with Silva, who takes office Jan. 1.

Categories: Mercosur.

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