MercoPress. South Atlantic News Agency

Mercosur-USA 4+1 talks.

Argentina and Uruguay will attempt to launch the 4+1 agreement talks, between Mercosur and United States, since the Free Trade of the Americas Association, FTAA, and process seems to be stagnant. The initiative should take place during the second half of 2003 when Uruguay will hold the Mercosur pro-tempore chair.

This apparently was the conclusion of Argentine Deputy Foreign Minister Martin Redrado's quick trip to Brazil and Uruguay where he met with presidents Lula da Silva and Jorge Batlle.

Apparently Argentina and Brazil are convinced the 4+1 mechanism can become a more effective instrument instead of the multi-country trade talks proposed by United States with the target of establishing a free trade zone extending from Alaska to Tierra del Fuego by 2005.

Although Mr. Redrado's continuity in the next Argentine government's cabinet is not sure, powerful Economy Minister Roberto Lavagna who has been confirmed openly supported the idea of regional blocks talks instead of discussions among the thirty odd countries in the three Americas.

"This does not contradict the idea of FTAA, and it could prove more effective to reach the same objective", said Mr. Lavagna.

However Brazilian Foreign Affairs Ministry sources are not that convinced and indicted that "if we look at the different US proposals to the different regional blocks, in the framework of FTAA those offered to Mercosur were the less attractive. How can we be sure that 4+1 will be an effective instrument?"

Brazilian sources added that "we're under the impression that they (Argentina and Uruguay) are trying to copy the Chilean trade agreement model with the US, but we don't think it favors Brazil or Argentina for that matter".

Mr. Redrado believes that the 4+1 discussions can be a more effective for the "market access" chapter, leaving complicated issues such as subsidies and antidumping policies for the World Trade Organization round, "giving Mercosur a chance of presenting more restrictive proposals in the services and investment chapters as Brazil wishes".

The Brazilian stance since Mr. Lula took office is that the United States "must considerably improve its proposal", otherwise "we'll be forced to demand a postponement for the creation of FTAA from 2005 to 2007".

Argentina and Uruguay do not adhere to this position.

When next May 27 President Lula da Silva meets with Ecuadorian president Lucio Gutiérrez he will have finished a round of talks with all South American leaders, and a clearer idea of Brazil's future steps can be expected.

Besides reinvigorating Mercosur, Brazilian diplomacy wants integration with Andean Community of Nations that includes, Bolivia, Colombia, Ecuador, Peru and Venezuela, plus a mid term regional financial fund to sponsor development.

Regarding Chile the only country in South America that has managed a free trade agreement with the United States, pending the signature by President Bush before it's sent to the US Congress for its consideration; President Ricardo Lagos anticipated that he also favors a strong political Mercosur and the active participation of Mexico.

However Mexico is a full member of Nafta, North America Free Trade Agreement, and is Brazil's main competitor in attracting foreign investment.