MercoPress. South Atlantic News Agency

Mercosur 2 to give smaller fry a break

The presidents of Brazil and Argentina yesterday pledged to try to answer the demands of small nations in Mercosur for a better deal from the trade bloc.

President Néstor Kirchner and his Brazilian counterpart Luiz Ignacio Lula da Silva met in Brasilia to discuss issues raised by Uruguay and Paraguay, whose complaints have threatened to weaken the trade group. Brazil and Argentina, South America's biggest and richest countries, represent more than 80 percent of Mercosur's economy and receive most foreign investment.

"The benefits cannot go only one way," Kirchner said. "Mercosur must also be a bloc of mutual assistance for balanced development."

Da Silva agreed that Brazil and Argentina must shoulder their responsibility in the process of regional integration and "be generous with our smaller brothers." Neither of the leaders, however, said what concrete measures would be taken for that purpose.

Argentina and Brazil are also entangled in their own trade dispute, which has led some Argentine businessmen to complain of "an invasion" of Brazilian products in Argentina. Kirchner and Lula, however, insisted that the relations between the two countries are "strategic" and pledged to work together to solve disagreements.

Mercosur has helped Brazil and Argentina boost their bilateral trade from 1.1 billion dollars in 1985 to more 16 billion last year. But Argentina had a deficit of 3.6 billion dollars with Brazil in 2005, more than triple that in 2004.

Lula yesterday acknowledged the asymmetry, saying that his country is willing to "improve bilateral agreements" so that the trade gap "does not become a structural problem."

Argentina has proposed the introduction of an "economic adaptation" system into the bilateral trade relation to protect some of the most vulnerable sectors of its industry, including car manufacturing, textiles and shoemaking.

The two presidents yesterday launched a new system for bilateral consultations, including meetings at presidential level every six months preceded by negotiations at ministerial level.

"The presidents repeated the importance and strength of a strategic alliance between Argentina and Brazil as a cornerstone of South American integration and a factor for progress, development and regional stability

Venezuelan President Hugo Chavez will join the talks today. Venezuela last month became a full member of the Mercosur trade bloc.

Mercosur is undergoing difficult times, as the governments of its other two members, Uruguay and Paraguay, had hinted at seeking unilateral free trade agreements with the United States.(BAH)