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December 22, 2014
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LatAm trade bloc competition sparks tension

Latin American presidents meet at a Mercosur summit held in Uruguay last year.

Mercosur leaders call for debate over integration with Pacific Alliance

Mercosur leaders yesterday called for dialogue with the Pacific Alliance over its perception that Mercosur is becoming an obstacle to integration and wider growth in the region.

Uruguayan Vice-President Danilo Astori seemingly sparked the debate a few weeks ago when he said that “Mercosur musn’t be a terminal station,” calling for formal trade deals with the Pacific Alliance.

Founded in 2011 and having staged its ninth summit on June 20, the Pacific trade bloc is comprised of Chile, Colombia, Mexico and Peru.

Concern over the new bloc’s indirectly divisive effects arose from the attendance of Paraguayan Foreign Minister Eladio Loizaga at the summit, staged in Punta Mita, Mexico.

Loizaga said the Pacific Alliance was “one of the most open (blocs) in the region that desires full integration, as well as the free circulation of goods, services, capital and people.”

Paraguay was expelled from Mercosur over the impeachment of Fernando Lugo, but was eventually allowed to rejoin in December last year upon the election of Horacio Cartes.

Business leaders of both blocs “understand there is a need for common insertion ... this is not a Boca-River situation, but objectives and instruments to be shared,” said Daniel Funes de Rioja, head of the International Organization of Employers and the COPAL food sector chamber leader.

Less optimistic was UIA industrial chamber head Héctor Méndez, who said the progress by the Pacific Alliance has business leaders worried.

“We have to make a great effort ... to decide where we want to go and choose a path ... Today Mercosur is experiencing a very complicated situation, and whoever speaks to the contrary is lying,” he said.

For Méndez, the Alliance is “competition for Mercosur because it has much more business in the Middle East, China and South East Asia,” while the South American bloc “cannot finish negotiations with the EU” over a free trade agreement.

The clash in ideology between the blocs was an issue for Víctor Báez, the head of CSA, an international union grouping, who said “there are great differences not only in their economics but also social aspects.”

Báez said that the conditioning of foreign investment must be intensified, rather than relaxed.

Government-aligned CTA umbrella union undersecretary Pedro Wasiejko slammed the Alliance as neo-liberal, arguing that if these countries make progress in setting up a trans-pacific alliance with Australia, Brunei, Canada, the US, Malaysia New Zealand, Singapore and Vietnam, “the same thing that happened with Mexico and NAFTA, when two million people lost their jobs, will happen.”

Herald with Télam

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