MercoPress. South Atlantic News Agency

Mercosur attempt to implement a common trade defence policy ‘won’t be easy’

Carnival: a Rio postcard but 80% of costumes were ‘Made in China’

Mercosur idea of a common trade defence policy has been present since the nineties but the initiative is difficult to implement because agreeing on a joint safeguard does not necessarily meet the demands of different interests, according to a leading economist from Brazil’s Getulio Vargas Foundation, GVF.

During the recent Mercosur summit in Paraguay country members agreed to work on the instrumentation of a joint policy that would react immediately to unexpected soaring levels of imports, an issue which is particularly irritating with manufactured goods from East Asia. A final report should be ready before the next summit in Montevideo.

Basically it would be a temporary flexible tariff instrument, each country member would apply according to the import challenges it faces.

“All country members feel threatened in certain sectors by Chinese competition”, said GVF economist Lia Valls but there are not always the same sectors in the four countries so “implementing safeguards in areas that affect Brazil don’t necessarily have to be convenient for Argentina”, added Ms Valls.

China in recent years has become Brazil’s main trade partner and the focus of 60% of its investments in Latin America, displacing the United State from that privileged position.

In fact from 2000 to 2010 bilateral trade soared 2.345% and ended 2010 at 56.4 billion US dollars. Imports form China in the same period jumped from 1.2 billion US dollars to 25.6 billion, which has triggered standing claims from Brazil’s industrial sector which is demanding protection from an inflow of “cheap” imports.

And all alarm bells went crazy when it was revealed that the colourful iconic costumes for that most Brazilian celebration Carnival, 80% had been ‘Made in China’.

Similarly bilateral trade of China with Argentina soared 700% in the last decade, in spite of the protectionist measures which both countries are applying.

Following the latest international financial crisis when Argentina adopted safeguards to protect its factories and jobs, bilateral trade in 2010 again began to expand reaching 13.1 billion US dollars with a surplus for China of 1.85 billion USD.

While television components and motorbikes parts are among the main Argentine imports from China, Brazil is more concerned about the inflow of goods that can compete with the textile, garments and foot-wear industries.

“The Chinese economy is extremely heterogeneous and versatile. There is a vast private economy that manufactures and exports which makes China the dominant force in several sectors world-wide”, according to Professor Antonio Barros de Castro, consultant for the Brazil-China Business Council.