MercoPress. South Atlantic News Agency

Mercosur declares expansion despite problems among founders.

The southern South American trade bloc established 10 years ago with an eye to spurring regional development and clout declared here a hefty expansion despite lingering problems between founding members that have made economic union more of a goal than a reality.

Those intra-bloc disputes were on display when Brazilian Foreign Minister Celso Amorim said that his country is considering imposing protective tariffs on Argentine imports if that nation insists on maintaining similar restrictions on products from Brazil.

Mercosur is nominally a free trade area formed in December 1994 among Brazil, Argentina, Uruguay and Paraguay. It announced here Wednesday the inclusion of Ecuador, Colombia and Venezuela as associate members, after having previously taken that step in recent years with Chile, Bolivia and Peru.

"If the protective measures were adopted for Brazilian products, clearly they would also have to be imposed on Argentine products," Amorim said.

He referred to actions taken by Buenos Aires limiting imports of Brazilian-made appliances. Argentine industrialists, only recently emerging from a deep depression that nearly ruined that nation's economy around the turn of the millennium, fear a possible flood of Brazilian imports.

The two nations in recent years also have been at odds over trade in automobiles, shoes and other products. Observers have pointed to the lack of genuinely free trade between them as grounds for describing Mercosur as more an expression of good wishes rather than a motor for true economic integration.

"Safeguards are obviously a means of limiting trade. We have tried to resolve the problems with Argentina in another way," said the Brazilian foreign minister.

Amorim is in Belo Horizonte for the final round of debates before today's summit. The acrimony between Argentina and Brazil has dimmed somewhat the luster of a regional conference that is to be attended by presidents and representatives from every South American country except Guyana and Suriname.

"We recognize that a problem exists and that it has to be addressed. We don't believe that the safeguards are the best way to resolve it, but we cannot rule them out," Amorim said.

The foreign minister said that many in his country are advocating a Brazilian tit-for-tat response to the barriers put up by Argentina.

"But the government can't think only about the very short term," Amorim said. "We have to have a strategic vision for Mercosur and a strategic plan." "Difficulties are natural during the recovery of the Argentine economy after a long industrial crisis," he said, adding that Brazilians would be foolish to think Argentina will simply give up its manufacturing sector.

With the new member states, Mercosur now encompasses nearly the same territory as the South American Community, which was created last week at a summit in Cuzco, Peru, with a focus that is more political than economic.

"All of the efforts we're making are aimed at creating a South American Union, in the mold of the European Union," Chilean Foreign Minister Ignacio Walker said, suggesting that the way to achieve this goal lies in seeking a convergence among the continent's various existing integrationist plans. Amorim said Wednesday that, despite Mercosur's problems, extension of free trade in South America remains a worthy objective.

As a trade bloc, he said, the continent would have greater clout in in negotiations for the U.S.-backed Free Trade Area of the Americas as well as in talks with the EU and at the World Trade Organization.

The Brazilian foreign minister noted that other countries are interested in joining Mercosur once it expands to include all of South America.

"There's a line of countries waiting to join" as associates Amorim said, citing Canada, South Korea, Mexico, Japan and China.