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Uruguay and Brazil have urged Mercosur partners Argentina and Paraguay to speed up an institutional reform of Mercosur in order to bring greater transparency and continuity to its policies, and put free trade talks with the European Union back on track.
The call was made by the two nations' newly-created Consultation and Political Accord Mechanism (MCCP). Uruguay's Deputy Foreign Minister Belela Herrera and her Brazilian counterpart Samuel Pinheiro Guimarães launched the call at the inaugural meeting of the mechanism earlier this month in Montevideo.
The officials said that stronger institutions would bring about transparency, stability and predictability to the trading bloc's policies and help consolidate macroeconomic coordination, improve competitiveness, and integrate Mercosur's chains of production.
They also renewed their nations' support to the proposed South American "energy ring" and called on Mercosur governments to redouble efforts in order to re-launch the stalled free trade talks with the EU.
In an ambitious 32-point act, they also called for further trade liberalization amongst member states and for the elimination of the double clamping of duties on non-Mercosur goods.
But despite their sanguine approach, the truth is that none of these issues will come about easily. For starters, the top item on the "institutional reform" agenda is the creation of a Mercosur parliament.
This is a highly contentious subject, mainly because governments in the area are reluctant to hand over decision-making to a supranational authority.
"There is fear in these (Mercosur) governments to delegate part of our national sovereignties in order to build a regional sovereignty" Argentine Economic Integration Undersecretary Eduardo Sigal told a recent seminar. "This is a quantum leap that requires great political determination".
But there's more - both Uruguay and Paraguay have made clear that they would be ill at ease with a system of proportional representation such as the one prevailing in the European Parliament, since their delegates would be badly outnumbered by Brazilian and Argentine legislators who could easily impose their decisions.
At a special session held May 30, Paraguay's Senate expressed full support for the Mercosur parliament but under the condition that all four members get the same number of seats in it. The 1991 Treaty of Asuncion that laid the foundations for Mercosur upholds the principle of equality among member states, they argued.
The MCCP expressed optimism that the Mercosur-EU meeting to be held September 2 in Brussels will produce "substantial progress" and that "negotiations will result in an effective growth in trade between the two blocs". Talks have stalled over market access, with Mercosur decrying EU's farm support policies.
However Argentine government officials see three possible scenarios for that meeting:
1- Negotiations are indeed revived and they move full steam ahead;
2- Negotiations are revived, but a less ambitious, "light" agenda is adopted in order to salvage the deal;
3- A wait-and-see attitude is espoused to give governments time to see what comes out of the upcoming round of global talks to be held by the World Trade Organization next December in Hong Kong.
"Why quarrel now about (EU) agricultural support policies when the issue will likely be tackled in Hong Kong?" one Argentine official said, suggesting that any substantial move would probably have to wait at least until next year.
Significantly, no mention of the now dormant Free Trade Area of the Americas - Washington's proposal to set up a free-trade zone from Alaska to Tierra del Fuego - was made in the MCCP document.
This article appeared originally in Mercopress - www.mercopress.com.
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