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Mercosur coordinating temporary tariff mechanism to defend home markets

Wednesday, September 21st 2011 - 00:41 UTC
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Textiles and foot wear are some of the main targets  Textiles and foot wear are some of the main targets

Mercosur coordinators are holding meetings in Montevideo to decide on a mechanism for temporary increases of national tariffs besides those already implemented under the common external tariff for the group.

The proposal which was first presented by Argentina during the 2008 crisis has now been retaken by Brazil the Mercosur member which is most actively preparing for another global crisis with the purpose of defending its domestic market.

According to the coordinators the mechanism approval should be consented, quick and allow members to apply their tariff position according to their interests and current imports situation.

“The mechanism will be applied to the final consumer good and is really an extension of the current list of exceptions to the common external tariff”, said a Brazilian diplomat.

Argentina and Brazil are negotiating the inclusion of fifty to one hundred products in that condition, and have the support of junior members Paraguay and Uruguay, “if the global crisis becomes more threatening, which will also mean a shorter consideration time for its implementation”.

Since the system will apply to final consumption products, there are no risks of triangulation, because the same product entering a second Mercosur member country, based on the origin rules, would have to again pay the import tariff.

The coordinated increase of Mercosur tariffs, as was agreed in 2007, referred to textiles, footwear and clothing, and at the time they were elevated to the highest allowed by the WTO, 35%. Paraguay and Uruguay at the time did not accompany the higher tariffs decision.

Brazil is also sponsoring what it defines as a “foreign exchange antidumping” mechanism which would allow slapping higher tariffs based on the fluctuations of the US dollar. According to Brazil, the US dollar has devalued 40% since 2006.

Another initiative refers to the desegregation of trade nomenclature items mainly auto-parts and toys, which should enable to better target specific products and not affect the whole group.

Likewise Argentina and Brazil want the Mercosur block to increase the external tariff for peaches and other tinned fruit in syrup.

Another tool which Argentina is already implementing is to increase the reference value for imports such is the case for tyres, auto-parts and other items from the sensitive list.

“Brazil has joined Argentina’s position regarding its domestic market. It has ceased to criticize protectionism and is now concentrated in defending its domestic market and Brazilian jobs, the Kirchner-formula. Quite a change”, said an Argentine coordinator at the Montevideo meetings.

Categories: Economy, Politics, Mercosur.

Top Comments

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  • Brasileiro

    Europe and USA, with the decadency of yours economies, need sale your manufacturies in other countries, and South América is the ideal place for this.
    We are in other century, in other millenium. Our people need jobs too. Our domestic market need protection of the abuses the developed countries. Stronger relationships with South América and Meridional África this is the way. We sale a primary products and food for the all planet, imprescindible things. We want buy services and high tecnologies only. We have a strong industrial base and, maybe, no need buy manufacturies in other places.
    The south américan trade must be open only to south américa countries.
    Excuse me for the my “casual” english.

    Sep 21st, 2011 - 02:13 am 0
  • GeoffWard2

    And so the Grand Plan dies with a whimper.

    This is the death of Mercosur - dying from the inside as well as being unable to make the links with the outside because of internal factionalism.

    Perhaps there never was any hope - with one dominant, one defaulter with extreme self-centred protectionism, and two minnows.
    But it *could* have WORKED.

    OK it needed a 'Civil Service' administrative class of people from each country with clear thinking, an understanding of the ultimate Mercosur objective and the way to get there, powerful drafting skills, and the ability to 'defend the thesis' to the death against all the slings and arrows of the individual vested-interest-political-classes.

    It was always going to be a tall order, given the rudimentary and barstardised structures of governance in each constituent nation; the absolute willingness to circumvent and disregard all rules, guidelines and even the Constitutions themselves.

    Perhaps these actions (outlined in the article) are the recognition of 'The South American Way' - a different, more self-centered, even anarchistic, approach to affairs.

    Brasil will weather this break-up - it will take some years before people agree that the break-up has actually happened - but other members will suffer badly, mostly from being 'picked off' individually by the predators and the vultures.

    There will be a need to trade, but the terms will be the selling of the soul and the real estate of the nations. . . because the whole, and the parts, did not achieve 'criticality' when the window of opportunity opened for them.

    Brasil will make a separate deal with the EU, simply in order to counter-balance the China Effect.

    The USA will force Brasil to the fore and try to ensure a middle-of-the-road-future for South America's jewel in the crown. There is no way the USA can retain the semblence of a SA sphere of influence without this strategy.

    So much more to say, but it's time to let others disagree with me.

    Sep 21st, 2011 - 11:51 pm 0
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