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SOUTH AMERICA
Region´s two major blocs sign free trade deal
Inter Press Service
11/11/2004
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Mercosur-CAN agreement creates fifth largest trade bloc in the world.

After overcoming some obstacles, South America’s two large trade blocs — the Southern Common Market (Mercosur) and Andean Community of Nations (CAN) — have signed an agreement to phase out all import tariffs over the next 15 years, with a view towards eventually creating an immense free trade zone in the region.

The so-called "economic complementarity" accord will go into effect in 30 days, when import duties will begin to be lifted, Uruguayan Foreign Minister Didier Opertti said after the agreement was formalized in Montevideo, Uruguay’s capital, on Oct. 18.

The new trade deal will enable a group of 10 South American nations to become "the world’s fifth largest trade bloc," said Opertti, who was appointed as new secretary-general of the Latin American Integration Association (ALADI).

The CAN — Bolivia, Colombia, Ecuador, Peru and Venezuela — and Mercosur — made up of Argentina, Brazil, Paraguay and Uruguay plus Chile, one of the Mercosur associate members — overcame a number of sticking points in the past few months to sign the agreement. Bolivia, Peru and Venezuela are also associate members of Mercosur.

The agreement, which includes all of South America with the exception of the smaller economies of Suriname, Guyana and French Guiana in the northern part of the continent, on the Caribbean coast, was originally signed in December and was to enter into force in July.

Tariffs will be phased out in stages, and through bilateral meetings between countries, without the need for parliamentary ratification in the majority of cases.

But discrepancies between several countries with respect to removing tariffs on some products and the timetables for doing so led the negotiators to postpone the deadline for three months, to gain time to work through the obstacles.

The main differences came up between Peru and Uruguay regarding trade in textiles and bicycles, and between Ecuador and Paraguay, over soybeans.

Not all in agreement

After intense negotiations, the technical teams met again in August in Montevideo and finished drafting the accord, which farmers affiliated to the National Agricultural Convention (CONVEAGRO) have condemned.

"This accord means the death of 85 percent of (Peruvian) agricultural producers, due to the fact that producers of meat, milk, rice wheat, cotton, oils and coffee because of the invasion of products mainly from Argentina, Brazil and Uruguay," CONVEAGRO president Luis Zúñiga told reporters.

The CAN and Mercosur together form a region of 17 million square kilometres (6.6 million sq. miles), with a combined gross domestic product (GDP) of US$800 billion — greater than the GDP of Canada and of the Association of Southeast Asian Nations (ASEAN), said Peru’s Foreign Minister Manuel Rodríguez.

Trade between the countries of the two blocs totals around $30 billion a year.

Brazilian Foreign Minister Celso Amorim said in a press conference that South American integration should not be merely economic, but social and political as well.

"This will put us in a stronger position in negotiations with the rest of the world, like the free trade accord with the European Union, and the FTAA (Free Trade Area of the Americas)," added Amorim.

The deadline for the creation of the FTAA — the free trade area promoted by the United States, which will include all countries in the hemisphere with the exception of Cuba — was originally late 2005, but the talks have virtually come to a standstill.


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