MercoPress. South Atlantic News Agency

Mercosur is going through “one of its worst moments”

Cancela optimistic about the Custom's code

Mercosur is going through “one of its worst moments” and has several “pending critical issues” such as “free circulation of goods and people and mitigating asymmetries” said Walter Cancela head of Uruguay’s Economic Affairs, Integration and Mercosur Office.

“The San Martin bridge which links Argentina with Uruguay remains closed to the circulation of people and goods, for over two and a half years now; this can only be described as one of the worst moments for Mercosur”, said Cancela addressing the Foreign Press Association in Asuncion, Paraguay.

Argentine environmentalists have blocked the bridge in Gualeguaychú in protest over the building on the Uruguayan side of the shared River Uruguay of the Botnia pulp mill.

“From a point of view of goods circulation we’re facing new difficulties all the time, not only taxes or extra tariffs (such as the Argentine export tax on grains and oilseeds, and Uruguay’s 2% consular levy) but also non tariff barriers” which impede free movements.

This would be the case of Argentina’s import licences which can retain operations for up to sixty days, according to whatever strategic policy or industry or sector the administration of president Cristina Fernandez de Kirchner wishes to benefit.

Cancela also mentioned the lack of agreement on the Mercosur Customs Code with the purpose of eliminating the current double charge of the common external tariff (AEC), which means that whatever product comes into any country member of the South American trade block must again pay the tariff if transferred to another country member.

However Cancela revealed that “we are close to reaching an understanding on the Code”, but regarding AEC “we’re stalled because of Paraguay’s position on the issue” which is not necessarily the distribution of levies collected but rather “how to guarantee those monies reach the beneficiary when they are collected by the Treasury of another country member”.

Uruguay has proposed the creation of a trust to manage those funds which is “independent from the Finance ministries of country members”, said Cancela.

Regarding asymmetries Cancela recalled that the strength and potential of Brazil and Argentina’s economies far outstrips Paraguay or Uruguay, and “we need to compensate” these misbalances, ensuring access of Uruguayan and Paraguayan goods to the senior members.

The structural investment fund (with soft credits) is a positive initiative but does not address the heart of the matter since which is market access.

“And we are talking not only about regular tariffs but also the infinite resource of non tariff barriers”, which can be imagined.

Mercosur is made up of Argentina, Brazil, Paraguay and Uruguay, with Venezuela in the process of incorporation. Chile and Bolivia figure as associate members.