MercoPress. South Atlantic News Agency

‘Mercosur is a good idea, badly implemented’ and not much of a ‘market’

Professor Malamud said Paraguay ‘is condemned to Mercosur’

Mercosur (Common market of the South) is a good idea, badly implemented, and it does not have much of “common” and much less of a “market” argues Professor Andres Malamud, researcher at the Lisbon University Social Sciences currently on a lecture tour in Paraguay.

“Mercosur is a good idea badly implemented. Probably it will never be like Europe since Europe has a great level of internal inter-dependence, the best trade associate of any European country is another European country”, pointed out Professor Malamud.

On the contrary most of Mercosur trade partners are out of the region, which means it’s not very ‘common’ nor is it a ‘market’ said the European academic.

“Supposedly it is a customs union but it’s not: you have internal customs and you have to pay every time you cross, sometimes twice, when in and when out”, added Professor Malamud.

More specifically on Mercosur junior member landlocked Paraguay, Malamud said the country “is condemned to live with Mercosur”.

In spite of the ongoing trade restrictions imposed by senior members Brazil and Argentina, there’s no option for Paraguay.

“Paraguay is a small country and Mediterranean. Chile for example is also small but not Mediterranean; it has strong institutions and a productive structure which allows it to compete with the rest of the world” said Malamud.

The question is whether Paraguay can skip the region? This would be ideal certainly but “the country is condemned to Mercosur because of its geographic situation. What it must do is try and make Mercosur something better”.

He added that Paraguay is paying the high costs of Mercosur but not receiving its benefits.

“We must remember that the success of the European Union is that it was constructed on the French/German axis which set the foundations for continental consolidation. Mercosur needs greater inter-dependency”.

Asked specifically if Brazil can play that ‘axis’ role Professor Malamud said strongly: “no, Brazil is big but not sufficiently large and above all its economy is relatively competitive and not complementary. Its two main export items are soy beans and iron-ore, the same as Paraguay and as Argentina, all shipped overseas”.

Malamud said that the degree of interdependence of Mercosur is roughly 20%, which means the block depends 80% on the rest of the world.

“Mercosur has a relative importance for small countries. Paraguay and Uruguay export and import from Mercosur more than Argentina and Brazil. The fact is that the big countries must be interested in sustaining the integration process, because on its own it won’t function”.

Finally on the benefits of Venezuela’s incorporation to Mercosur and the issue of President Hugo Chavez, Malamud said it was an interesting question.

“The access protocol is for Venezuela, not for president Chavez. Inside Venezuela even the opposition defends the incorporation to Mercosur because they feel it could mean a scenario where to claim human and civil rights and expose Chavez systematic abuses of authority”, concluded Malamud.