Mercosur more than a common market is a “poor customs union” said Uruguayan president Jose Mujica adding that new discussions on the future of the group’s future should be considered but which imply the possibility of establishing new free trade agreements with third parties.
“We can’t and should not cheat ourselves: in recent years Mercosur is stalled and with growing difficulties to trade among its partners…although there is the manifest bilateral determination which we believe will continue to advance with Brazil” said Mujica on Friday in his daily radio broadcast.
“The truth is that in the whole block we have pachyderm size difficulties to advance or to try to advance”, admitted Mujica who warned about the recent announced intention of the United States and the European Union to establish a major north Atlantic free trade zone.
“How do you penetrate such a huge free trade space? We must lift our heads and look around to what is happening in the world. Imagine the growing difficulties for those left out in the cold to have access to those agreements”, insisted Mujica.
The Uruguayan president also mentioned the free trade Pacific alliance sponsored by Chile, Peru, Colombia and Mexico, open to foreign investment and the private sector, which has attracted other countries such as Canada, Panama and other Central American countries. “We’re only observers, conditioned by our Atlantic partners’ charter”.
Mujica said it was evident that bilateral agreements among countries and blocks of countries are clearly replacing the race for trade rules’ attempts at global level. “The world is heading for groups of countries that dispute preferential trade situations vis-à-vis others”.
The Uruguayan president said that currently “there is panic to be left on your own” and admitted Uruguay has received several ‘very interesting’ proposals for trade alliances, such is the case with Korea, but “no decision has been taken because the dilemma of Mercosur persists”.
Under Mercosur rules trade agreements with third parties can only be formalized if all full members are included, which seriously limits any bilateral understanding. Likewise with Argentina and Venezuela as full members and their current policies towards foreign investment, the group’s chances of further agreements are seriously questioned by the private sectors of the other members.
In Brazil the current and previous governments seem politically satisfied that they have Argentina and Venezuela in their orbit of influence. However the powerful industrial lobbies feel they are losing touch and competitiveness with the rest of the world and are demanding that Brazil dumps Mercosur or changes its association rules. Increasingly limiting industrial production to exports to Mercosur and Africa “is not the way forward for a strong, competitive at world scale long term economy”