MercoPress. South Atlantic News Agency

Mercosur promotes trade with local currencies, far from “US dollar tensions”

Argentine Economy minister Amado Boudou is enthusiastic about the bilateral experience with Brazil

Mercosur is considering extending a “successful” Brazil/Argentina bilateral trade experience which sidelines the US dollar and privileges regional currencies to the rest of the group’s full members, Paraguay and Uruguay, thus avoiding being submitted to the “greenback’s tensions”.

Mercosur Finance and Foreign Affairs ministers plus Central Bank presidents are holding discussions in Montevideo in the framework of the biannual presidential summit which officially begins on Tuesday when the leaders meet.

“It is very important for us small countries, the vision of Argentina and Brazil on world financial events since they are active members of the G-20 group that is re-drafting financial rules”, said Uruguayan Economy minister Alvaro García in reference to the technical meetings in anticipation of Tuesday political announcements.

“One of those issues is the sustained depreciation of the US dollar at world level and how the so called central countries are going to act to address the international financial crisis, something which is fundamental on the short term but also on the medium term”, added García.

Argentine Economy minister Armando Boudou who also participated in the technical discussions, and will be a reference for the next six months when Argentina officially takes the Mercosur chair on Tuesday, said that the Argentine/Brazilian experience of financing bilateral trade with local currencies has been “very successful” and “most learning”, an experience “that will soon have the Uruguay/Brazil leg added to it”.

Boudou said that Argentina’s bilateral trade with Brazil in local currencies had been steadily growing at 15%, “still modest, but sustained”, which is “encouraging”. He added that while international trade with the rest of the world had tumbled 45%, “trade among Mercosur members was up 20%” which means “we are on the right track of a good strategy”.

“This is an issue, paying for trade in local currencies, which as a trade block will have great preponderance. From now on we are going to give this proven initiative a great boost since our countries have been submitted too long to US dollar tensions and we have the tool with our local currencies to promote trade and businesses”, added the Argentine minister.

“I’m convinced all Mercosur members will finally sign based on the Argentine Brazilian experience, since it will help strengthen integration with an instrument that has helped overcome the challenges of the international crisis”.

Argentina’s Foreign Affairs minister Jorge Taiana talked about another vital issue for Mercosur: negotiations with the European Union to finalize a trade agreement hopefully in the first half of 2010 when Argentina will be holding the Mercosur chair and Spain will be presiding over the EU.

“What is most significant is the willingness to advance in Mercosur/European Union negotiations” which makes it particularly important in the framework of the international crisis and in “the need to achieve a productive integration in difficult years as we are going through”.

However Taiana was also cautious, “we’re still quite distant. I believe we must continue to advance and retake negotiations specially when there are coincidences from both sides that this is the moment”.

Cooperation negotiations with the EU were first launched in 1995, in Madrid, but have since remained stalled in spite of the several efforts to re-launch them. At the time the ambitious agreement covered not only trade but also politics, culture and foreign affairs consultations.

Argentine president Cristina Fernandez de Kirchner who recently had a long private exchange in Portugal with Spanish president Jose Luis Rodríguez Zapatero will be briefing her Mercosur counterparts on plans for the coming six months.

For the Tuesday summit picture the presidents confirmed are: Argentina’s Cristina Fernandez de Kirchner; Brazil’s Lula da Silva; Paraguay’s Fernando Lugo, host Tabare Vazquez and Venezuela’s Hugo Chavez.

Contrary to what was originally announced associate member Chilean president Michelle Bachelet will miss the appointment and Colombia’s Alvaro Uribe will be replaced by Vice-presidents, Francisco Santos.

The political agenda of the Montevideo summit is also expected to include the Honduran situation and the recent election and the ongoing (and escalating) conflict between Venezuela and Colombia.