MercoPress. South Atlantic News Agency

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Headlines: Mercosur requests open markets from Europe; Fed keeps rates unchanged.

Mercosur requests open markets from Europe

Mercosur requested a considerable increase in the European Union access offer to agriculture markets during the ninth round of talks in the framework of the bi-regional association agreement currently being held in Brussels, Belgium. "We believe the EU offer is still insufficient and it does not satisfy our expectations", said Rigoberto Gauto, Paraguay's Economy and Integration Minister, who heads the team of Mercosur negotiators. "We expect a considerable EU opening involving those areas where we are most interested such as farming and agro-business. We know that agriculture is a sensitive issue for the EU but so is car manufacturing for Mercosur", indicated Mr. Gauto whose country holds the customs union six month chair. Argentine negotiator Martín Redrado said that Mercosur didn't come to Brussels to change Europe's Common Agriculture Policy, CAP, "but we're interested in market access and in those products most sensitive, we're willing to discuss quotas, or a system that does not harm PAC or European farmers". However Mr. Redrado pointed out that Europe "still has to sit down and negotiate that 10% where Mercosur is most competitive, and that so far they seem unwilling to address". Mercosur is pressing EU for a greater transparency and simplification of quasi-trade barriers such as ad valorem tariffs and other bureaucratic procedures that impede, slow or discourage imports. The IXth round of negotiations is scheduled to end this Friday. The Mercosur-European Association agreement includes the creation of a free trade area.

Fed keeps rates unchanged

United States Federal Reserve kept this Tuesday the basic interest rate unchanged at the 41 year low of 1,25%. But it also indicated it would heighten surveillance of the Iraq situation adding it was ready to cut rates if the war had an impact in the economy. Breaking with tradition and emphasizing the seriousness of the situation, the Federal Open Markets Committee, FOMC, failed to issue an assessment of the risks facing the United States economy. The Fed said it could not usefully characterize the current situation given the uncertainties that abound, stressing that it would withhold any economic risk assessment until after some of the "unusually large uncertainties facing it abate". Seventeen of the twenty two major companies that trade directly with Fed bonds in Wall Street had anticipated that FOMC would decide to keep the basic rate unchanged at 1,25%. "Monetary policy actually is very flexible and the Fed is keeping all its options open, waiting to see how the conflict evolves", commented Gary Thayer from A.G. Edwards and Sons Inc. The Fed's message suggests that it is poised to cut rates without waiting for its regular monthly meeting if the war hits the economy hard. The funds rate is the interest banks charge each other on overnight loans and is the Federal Reserve main tool to influence economic activity. However Federal Reserve policymakers stressed that the underlying health of the US economy is strong and blamed the slowing down to higher energy prices and war fears. Last week the US Labour Department reported that unemployment had reached 5,8%. FOMC is scheduled to meet again next May 6th. Wall Street brokers believe the Fed could appeal to other instruments to reactivate the US and world economy such as purchasing back Treasury bonds and injecting liquidity to markets. Latinamerica condemns war and demands disarmament All Mercosur members and most of Latinamerican countries are against military action in action and in spite of US President George Bush 48 hours ultimatum to Iraq, the region still expects a diplomatic solution to the confrontation including the full disarmament of the Baghdad regime. Colombia and Bolivia are the only two countries that support the US decision arguing that the diplomatic process can't be kept indefinitely and because United Nations resolutions must be enforced. However they agree that all paths must be exhausted to avoid war. Mexico and Chile, non permanent members of the Security Council reacted to the ultimatum demanding recognition of the letter and spirit of the UN chart and regretting that "we have been unable in the Security Council to find a solution". In a rare intervention British Primer Minister Tony Blair praised in Parliament Chilean president Ricardo Lagos constructive efforts to muster a consensus in the Security Council, that apparently was quiet close to be achieved. In Buenos Aires Chief cabinet minister Alfredo Atanasof met with French Ambassador Paul Dijou and revealed "permanent contacts" with Mercosur and Rio Group members to subscribe a joint Latinamerican declaration in the coming 48 hours. Brazilian president Luiz Inacio Lula da Silva talked to UN Secretary General Kofi Annan and other world leaders "trying to find a solution that could avoid the military conflict" said a presidential advisor in Brasilia. Venezuela and Ecuador ratified their unconditional commitment to International Law and a peaceful solution to the Iraq conflict, adding that they only recognize Security Council resolutions. Colombia in an official release supported the American-British-Spanish "Azores Declaration", but Foreign Secretary Carolina Barco said that "Baghdad still has time to completely comply with UN Resolution 1441 demanding full disarmament". Bolivian Minister of Foreign Affairs Carlos Saavedra stressed that "dialogue can't go on indefinitely otherwise no one will take the United Nations seriously". In Spain, the country's main newspapers underlined the contrast between Mr. José Aznar who aligned the country behind Washington and London, and the Mexican and Chilean Presidents stances, resisting United States pressures, and even presenting a compromise solution.