For Mercosur it is absolutely crucial that the trade and cooperation agreement with the European Union becomes effective said Uruguayan Vice-president Danilo Astori who indicated that Brazil and Uruguay are advancing the agreement at a faster speed than Argentina, which is involved in a more protectionist focus.
This is crucial, we are advancing holding a round of meetings, one is currently taking place in Uruguay: Argentina's attitude sometimes slows up the advances, indicated Astori who is quite skeptical about the prospects with Mercosur second largest economy while the current economic policies persist.
What we have are different speeds and what we are exploring is the possibility of reaching an agreement with the EU at more than one speed. The fastest is the goal of Brazil and Uruguay, and I'd dare say also Paraguay; the slowest is from Argentina which implements a very protectionist approach. They have a more austere list of products with negotiable tariff reductions, but let's hope we can advance along this path and the Europeans accept, added Astori.
Uruguayan foreign minister Luis Almagro indicated earlier in the day that the target for Uruguay is to have the agreement closed in the first half of next year.
EU/Mercosur negotiations for an ambitious trade and cooperation agreement were started in 1999, but were stalled for several periods until re-launched in 2010, and since then a round of meetings have seen discussions advance considerably. But Argentina's reluctance and policies promoting domestic industry and market, which triggered reactions from several countries before the World Trade Organization, have been an impediment.
Furthermore the suspension of Paraguay last year from Mercosur in a controversial decision, which included downgrading diplomatic relations, did not help and the EU and member countries never ceased to support Paraguay. Finally the inclusion of Venezuela and its unorthodox economics, as a full member did not necessarily add even when Caracas will not be participating in the trade agreement with the EU, if it is finally crystallizes.
Astori was not enthusiastic about President Cristina Fernandez administration latest cabinet reshuffle and the announcement that Argentina will keep advancing with its current economic model, which is questioned from different sectors in the country.
Prospects are not good, there's a tremendous risk of economic distortion if Argentina goes ahead with a multiple exchange rate system. It's not an easy instrument to manage and experiences in Argentina are not necessarily encouraging, said Astori.
If Argentina finally implements this system, we will have to analyze its effects for Uruguay, but it is a measure contradictory to the spirit if not the letter of Mercosur charter. An integration project means implementing economic policies in each country with the same concepts and converging. But Uruguay has an open-market emphasis and Argentina is the most protectionist of Mercosur members, pointed out the Uruguayan official.
Likewise next year Brazil loses several tariff privileges with the EU because it has been reclassified as 'high middle-class' country, and is anxious that an agreement is reached before the new tariff system is made effective.