MercoPress. South Atlantic News Agency

Trade disputes between Argentina and Brazil

Nine Latin American presidents renewed in Brazil their pledge for economic cooperation, despite enduring disputes and tariff barriers between Argentina and Brazil

Argentine President Néstor Kirchner said Latin American countries had to stick together, in a speech seen as a warning to resurging Brazil, the continent's biggest and richest nation.

??None of our countries is big enough or strong enough that it can do without the regional market,'' Kirchner said in the colonial city of Ouro Preto where the Mercosur trade bloc was founded 10 years ago by Brazil, Argentina, Paraguay and Uruguay.

} Argentina is demanding safeguards to protect its industries from Brazilian imports. Brazil opposes the safeguards but is willing to negotiate a solution.

Kirchner said some countries cared only about domestic interests. ??The presidential decisions aren't reflected at the negotiating table later, where local problems seem to take precedence,'' he said. Kirchner also insisted that "the Asunción Treaty be rescued from the archives and fully implemented."

Preceded by Brazilian President Luiz Inácio Lula da Silva, who focussed on the progress made by the Mercosur rather than the problems faced by the two senior members, Brazil and Argentina, Kirchner insisted in his address at the summit that "we have to move ahead with industrial policies that ensure the initial idea of the project, which was intra-industrial development."

Kirchner pointed out that the benefits of the integration process "can't just be one way" and that the Mercosur "must be set up as a reciprocal assistance bloc, without ignoring existing asymmetries".

During the presidential summit, Venezuela, Colombia and Ecuador became associate members of Mercosur, with similar standings to Bolivia, Chile and Peru.

President Martín Torrijos of Panama, which also aspires to become an associate member, attended the meeting. Mexico, likely to join the group under the same status in early 2005, sent its Foreign Affairs minister, Luis Ernesto Derbez.

But Uruguay's President Jorge Batlle said the real challenge was to lower trade barriers.

??As long as there is no open and free trade, our nations will not grow,'' Batlle said. Battle's call touched a nerve. Brazil and Argentina still have higher import tariffs than small members and associates.

Chile, for example, has an average tariff of 5%, and Bolivia a slightly higher. But Brazil has an average tariff of 14%.

Chile's President Ricardo Lagos said his country would not apply for full membership to the bloc because it would have to increase its import tariffs.

Still and is spite of all the criticisms, optimism about Mercosur's future prevailed.

??We are ratifying that Mercosur is not only a choice but our destiny'' insisted Brazil's Luiz Inácio Lula da Silva.

Mr. Lula da Silva said that, because of the trade pact, 10% of Brazil's imports came from Mercosur. Argentina is Brazil's second largest trade partner, ahead of Germany and trailing only the United States.

During the meeting Brazil transfered the rotating six-month presidency of Mercosur to Paraguay, led by President Nicanor Duarte.