Mercosur and trading blocs

With the inability of the World Trade Organisation (WTO) to bring the 2001 Doha (Development) Round of negotiations to a conclusion, there has been a bewildering number of bilateral and multilateral trading platforms launched in the interim. Trading blocs formed earlier have also become more energetic.
The recent announcement that Foreign Minister Carolyn Rodrigues-Birkett will be attending the July11 meeting of Mercosur (Common Market of the South) and, along with Suriname, Guyana will be given “associate” status, suggests we examine the dynamics behind the move.
Mercosur has been around since 1991, having been launched by Argentina; Brazil; Paraguay (which is currently suspended); and Uruguay. Venezuela became a full member last year while Paraguay, which had opposed its accession, was suspended.
Paraguay’s action illustrates the major feature of Mercosur: the ideological orientation of the major players such as Brazil and especially Venezuela, not to accept the ideal of ‘free trade’ tout court.
Back in 2005, under the strong influence of Brazil, the bloc torpedoed the U. S. sponsored Free Trade Association of the Americans (FTAA). The U. S.’s refusal to give ground on agricultural subsidies while pushing services and intellectual property rights were the sticking points. These same issues stalled Doha.
But this has created some tensions within the bloc and is one reason for the recent lassitude in activities. Mercosur has five “partners” – Chile, Bolivia, Colombia, Ecuador, and Peru – that do not enjoy full voting rights or complete access to the markets of Mercosur’s full members.
They receive tariff reductions, but are not required to impose the common external tariff that applies to full Mercosur members. Four of those countries – Bolivia, Colombia, Ecuador, and Peru – are also members of a smaller trade bloc, the Andean Community of Nations (CAN). The rules of Mercosur demand that a country cannot be a full member if it is in another trade bloc. Venezuela had been a member of CAN, but resigned when it joined Mercosur in full last year.
Bolivia has indicated its interest in becoming a full member but in addition to leaving CAN would also have to lower its external tariffs to Mercosur’s 35 per cent. Both these issues would apply to Guyana and Suriname, which are members of the Caribbean Community (Caricom). But with the latter grouping going nowhere, some of its other members have shown some interest in entering Mercosur en bloc. In this scenario, the Economic Partnership Agreement (EPA) signed by Caricom with the European Union (EU), would also be a sticking point.
In the meantime, Mercosur has attempted to deepen and widen its economic and political reach by coming together with CAN in 2008 to form the Union of South American Nations (UNASUR). UNASUR is meant to encompass trade, security, and political issues, much like the European Union (EU) and some believe it may replace Mercosur as the South American organisation to speak for the entire continent.
But those countries that insist on “free trade” and the “sanctity” of the market have not thrown in the towel: last year they launched the Pacific Alliance – a bloc made up of Mexico, along with the “partners” of Mercosur – Colombia, Peru, and Chile.
Looking across the Pacific to cultivate closer linkages with Asia, they have moved very aggressively in the past year. Stressing their “stability” and their adherence to the neo- liberal world order, they have caught the attention of other countries such as Costa Rica and earned accolades from Canada and the U. S.
The United States has also not been quiet. Under great secrecy, it has pushed since 2010 for the granddaddy of all free trade blocs: the Trans-Pacific Partnership (TPP). This would include the U. S., Australia, Brunei, Chile, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Japan has expressed its desire to become a member. Some say it is a platform for the U. S. to gain some leverage over the Chinese.
Guyana has chosen well to go with Mercosur.