Mercosur to scrap tariff exemptions, services barriers

– to adopt investment guarantees, common licence plate

President Bharrat Jagdeo on Thursday participated in the closing of the social forum of the XL Mercosur summit in Foz do Iguacu, Brazil, and subsequently attended a state dinner hosted by Brazilian President Luis Inácio Lula da Silva. The Guyanese leader will participate in the plenary session today. The South American trade bloc launched a plan on Thursday, December 16th, to adopt common trade, investment and immigration policies to help underpin unprecedented economic growth in the region, Reuters reported. 

Under the plan, the four member countries – Brazil, Argentina, Paraguay and Uruguay – agreed to draft common investment guarantees, anti-trust laws, and a single policy on the automotive industry. They also intend to eliminate barriers to service industries and tariff exemptions on goods, which have undermined the cohesion of the customs union. 

Delayed by nearly a decade of political and economic crises that risked tearing the trade bloc apart, Mercosur this year regained some of its momentum, and regional leaders again are speaking of creating something similar to the European Union in South America. 

At a press conference at the Office of the President   on December 15, President Jagdeo had said that the summit would provide the opportunity for Latin American heads to discuss issues that require urgent attention, as was agreed by Union of South American Nations’ (UNASUR) heads during its fourth Regular Summit in Guyana on November 26. 

Appointment of the new secretary general for UNASUR is among the issues that will likely be discussed at the meeting, President Jagdeo said. 

President Jagdeo, in his capacity as chairman of the UNASUR, is leading Guyana’s delegation, which includes Foreign Affairs Minister Carolyn Rodrigues-Birkett; Director General Elisabeth Harper; Agriculture Minister Robert Persaud; Presidential Advisor on Governance, Gail Teixeira; Chief of Staff of the Guyana Defence Force Commodore Gary Best; and General Secretary of the People’s Progressive Party (PPP), Donald Ramotar.

 Significant growth 

Mercosur economies are growing at an annual rate of between 7.5 per cent and nine per cent; and internal trade, including that with prospective member Venezuela, has jumped to nearly US$40 billion from a fraction of that a few years ago. 

“Mercosur was going to disintegrate. Despite the pessimistic forecasts, it’s moving forward,” said Brazil’s outgoing Foreign Minister Celso Amorim on the sidelines of a Mercosur summit in Foz do Iguacu, the site of world-famous waterfalls. 

The group’s growing cohesion could also help strengthen South America’s bargaining power in trade negotiations with other countries and blocs, such as the EU. 

“It’s becoming a growing reference point for international investment,” Amorim said, citing meetings he had on Thursday with trade representatives from Australia, the United Arab Emirates and Turkey. 

Mercosur’s plans to adopt investment guarantees coincide with growing cross-border investments in the region, particularly by Brazil. Some of those have come under threat.

Bolivia nationalised Brazilian oil and gas assets in 2006, Ecuador has had disputes with Brazilian construction and oil companies, and Brazilian farmers have been threatened with expulsion in Paraguay. 

In a symbolic display of unity, a bus that is to carry the summit leaders on Friday will display a new Mercosur licence plate that is to be adopted throughout the region in coming years to facilitate travel and curb cross-border auto theft. 

“We want to put Mercosur in everyone’s garages,” said Antonio Ferreira Simoes, a senior Brazilian diplomat who was involved in drafting the plan. 

He said the union’s 240 million inhabitants were also to be given common identity cards in the coming years. Mercosur moved in June to streamline the union’s common external tariff, ensuring the free circulation of goods by 2014. 

Entrepreneurs had long complained of having to pay import tariffs more than once in what should be a single customs union.