MercoPress. South Atlantic News Agency

Last minute efforts to incorporate Peru

Mercosur and Peruvian officials are working overtime in Lima, Peru, in a last minute attempt to reach a free trade agreement between Peru and Mercosur on time for the two days official visit of Brazilian president Luiz Inacio Lula da Silva.

Negotiations have two main hurdles: Mercosur objects some origin regulations that would limit suppliers, and Peru is against including tax-free zones in the 4 plus 1 agreement, similar to that signed by Chile with Mercosur.

"We're determined and trying to convince all South American countries to join Mercosur, including Mexico", said Brazilian president who arrived in Lima Sunday evening with a delegation of a hundred businessmen.

"Regional integration is one of the priorities of Brazil foreign policy. We want to make integration something concrete and constructive because integration is useless without highways or bridges", added President Lula da Silva.

Brazil expects to agree with Peru the building of a "transoceanic corridor" that will link the Amazon area of Manaos with Peruvian ports giving Brazil direct access to the Pacific basin.

Early last week Mercosur Foreign Affairs ministers met in Montevideo to define the strategy for the Lima negotiation round that should be finalized for the signing ceremony this Monday of Peru's incorporation.

An agreement with Peru is expected to open the way for a quick integration of the whole CAN (Community of Andean Nations) region, (Bolivia, Peru, Ecuador; Colombia and Venezuela).

Uruguay's textile industry is not convinced of the coming agreement and has objected Peru's insistence on the origin regulations that would favour CAN suppliers instead of Mercosur. Peru on the other hand has a strong growing textile industry that the government is determined to keep promoting.

"It's a complex negotiation with a market of difficult access", remarked Uruguay's Foreign Affairs Minister Didier Opertti.

To overcome members mistrust of a greater Mercosur, Brazil has launched the "Competitive Imports Substitution Program" that is geared at giving weaker countries the opportunity of becoming regional suppliers. Additionally it is sponsoring and financing joint commercial delegations overseas to promote trade with Mercosur.

Peru has a population of 26 million and its GDP is equivalent to 55 billion US dollars. Trade between Peru and Mercosur is limited: Peru exports 200 million US dollars and Mercosur sales are just above a billion US dollars.