EU economic relation with MERCOSUR Essay

IntroductionMERCOSUR ( southerlyern Common Market) was found in 1991 as a customs union and common grocery store between Argentina, Brazil, Paraguay and Uruguay. Chile and Bolivia later joined as associate Mercosur members. Since mid-2000, they lose been engaged in negotiations with the EU to establish a free duty area c overing both partings.History in the MakingOn May 28, 2004, EU and MERCOSUR trading representatives convened in Guadalajara, Mexico to continue an ongoing negotiation process. MERCOSUR holds a comparative advantage in a wide ordain of agricultural cite, which composes much than half of its total exports, while atomic number 63 is specially strong in industrial and capital grocery stores, such as automobiles, telecommunications and banking.Their antonymous economies seem ideally suited for engaging in free clientele, with for each one component of the bloc specializing in their specific fields of strength. However, import quotas and tariffs, intend to pr otect MERCOSUR members infant industries as well as high make up European give riseers, present mountainous obstacles to the realization of any free backup agreement. At the May 28 summit, both sides tentatively agreed to generate their markets to external competition. The EU and MERCOSUR have each shown a willingness to make uncontrollable concessions in order to see their negotiations come to fruition.The Border is ClosedThe European Unions protectionist agriculture regulations insulate locally grown produce from foreign competition. Cultivatable land, a precious and scarce commodity on the continent, is extraordinarily expensive. Hence the European Parliament instituted subsidies, import quotas and tariffs to keep the regions relatively inefficient agro-industry afloat by regulating prices on the European market.These policies have effectively kept MERCOSUR products out of the European market as the EU refused to negotiate on opening its markets up to foreign competition by the raising of its quotas and the lowering of its tariffs. However, European negotiations have latterly made important concessions aimed at expediting the process. The EU Common Agricultural insurance policy of 2003, which significantly reduced Europes bring up subsidies, coupled with an addition in import quotas and a lowering of tariffs, have strengthened MERCOSURs confidence in the positive outcome of trade talks.Europes reluctant acquiescence to MERCOSURs demands is an attempt to pursue a system aimed at obtaining greater access to South American markets where European industries and sectors (such as automobile, telecommunication, banking and computer production) have excelled in the past and appear to have an evening more prosperous future.Like its European counterpart, MERCOSUR has traditionally been averse to granting greater access to these markets, defending its protectionist policies with an infant industry argument. These industries are too small, it halts, to re pugn in the world market, and therefore opening its borders at this time could subvert domestic firms. However, the South American Common Market has recognized the conditional relation of Europes offer, and in return, has allowed for ever greater access to its telecommunication and banking industries.Partners in Decay at that place is a shootside to the growing ties between Europe and MERCOSUR. Europes courting of MERCOSUR is at best undermining the fabric that binds the weak G20 together. G20 members fear that the EU-MERCOSUR agreement could provide unfair access to markets, which would be misbranded according to the World Trade Organization (WTO) standards.According to these, Most happy Nation Status (MFN) cannot be reserved for specific countries, but must(prenominal) be shared among all applicable WTO members. According to some G20 members, including China, India, South Africa and Brazil, the European Unions decision to engage in trade talks with MERCOSUR is a stratagem t o undermine the G20, an organization that could potentially crusade serious problems for both the EU and the join States.Restructuring the MapAn accord between the two giant trading blocs has the potential to upset and shift the offset of power in the global trade arena, not only poignant the G20 but also challenging US frugal hegemony in the westerly Hemisphere. A leading light in the Cairns group of agricultural exporters and a founding member of the G20, Brazils political clout in the international community is growing exponentially. Its ability to command greater venerate in political and economic agreements has persuaded the EU to offer greater concessions to MERCOSUR and is forcing the fall in States to reformulate its position on the superfluous Trade airfield of the Americas (FTAA).There is no doubt that Brazil is using the EU-MERCOSUR trade agreement, and the commercial windfall it should bring, as a weapon to increase its bargaining power in forthcoming FTAA tal ks with upper-case letter concerning farm subsidies. The election of two left-leaning presidents in Brazil and Argentina, as well as a shift aside from a Western Hemisphere trade pact toward a more amicable courtship with Europe, reflects a fundamental change in Brazilian and Argentine political relation as well as in their outline in dealing with the US. Neither government wants to be considered, as Brazilian President Lula stated during his presidential campaign, an annexation of the United States.In 2004, worries over approach in negotiations deepened as the co-chairmanship of the FTAA rotated to the United States and Brazil. Unfortunately, the inability to compromise by the proposed trading blocs two major powers has stalled progress on the realization of such an agreement. It also has persuaded a newly substantiate pessimist MERCOSUR to look across the Atlantic for an opportunity to further its global compel and self-interests. The United Statess reluctance to discuss any reductions in farm subsidies during recent FTAA trade rounds has hindered the chances of signing a Free Trade Area of the Americas agreement by 2005, the projected year for it to be announced.Meanwhile, Europe has slipped into the foreground, wide-awake to equal or even replace the United States as the predominant trading power on the South American continent. The United Statess hegemonic status in the Americas is in peril. To maintain a semblance of the status-quo, Washington will have to concede to demands for a slash in farm subsidies if it wishes to reignite the negotiation process, or at least keep it alive, and to maintain itself as the predominant regional superpower, the US will be labored to compromise.The EU-MERCOSUR free trade agreement without a interview is a holy terror to the United Statess dominance in the region. Europes recent decision to open its agricultural markets to foreign competition leaves Washington in a precarious position at the negotiating table with its Latin American counterparts. Previously, the EU and the US held the same line regarding agricultural subsidies both argued that the state should be addressed at future WTO trade rounds rather than by bilateral trade agreements. If it now wishes to remain competitive with Europe in the South American market, Washington will have to address the case of the subsidies and import quotas that up to now have plagued many of the Latin American countries. With the EU now retreating from its long held protectionist position, the US can no monthlong expect to walk away from negotiations with a victory in impart which places Latin America in a dependent position in the FTAA.Scraping Bottom US-Latin American RelationsThere is no question that US-Latin America relations are at their lowest point in a generation. Clearly, when it has come to leadership and a strong moral spatial relation regarding US policy initiatives towards Cuba, Venezuela and Haiti, Secretary of State Powell has provided no leadership and sure as shooting no vision. By default, such leadership fell into the hands of Otto Reich and a small band of venomous rightwing ideologies headed by Otto Reich, Roger Noriega and Dan Fisk, who held their places because Powell allowed them to be imposed on him.As a career propagandist and huckster-ideologue, Otto Reich built his professional public on disseminating public disinformation along with a capacity for extremist politics that have done incalculable damage to the maintenance of a equilibrize and accountable regional policy. Almost single-handedly, he has bent and distorted US-Latin American relations and has produced a level of odium that cannot be easily recalled in the recent chapters of the bilateral relationship between the two hemispheres.His legacy merely serves that word, filled as it has been with vulgar rhetoric, meretricious analysis, Rasputin-like conspiracies, and an inability to distinguish responsible behavior from that of a lo w quality goon. He, together with his fellow alumni from designer Senator Helmss tawdry regional policy-making workshop at the Senates foreign relations committee, the State of Departments Roger Noriega and Dan Fisk, have kaput(p) a long way to pollute US hemispheric ties so fundamentally that it will take a generation to undo.From a Caribbean, Andean or South American standpoint, the EU-MERCOSUR pact strengthens their respective chances for a fairer and freer FTAA agreement. The United States can no longer treat its hemispheric partners as subsidiaries of a holding company which it controls now that Europe has presented itself as a practicable second option for a binding trade relationship.Living in an era of increasingly free global trade, the EU-MERCOSUR pact could be a refreshing change from a history of largely self-serving and US-dominated agreements. The trade agreement between the European Union and MERCOSUR could come to rival the Free Trade Area of the Americas as a maj or hemispheric economic force, even if both are achieved. As the United Statess wooly power continues to decline in the region, Europes global comport looks increasingly more appealing. If the US wishes to maintain its traditional position astride the Western Hemisphere, it must learn from its European counterparts how to stop talking down and start talking to Latin America.Internet ReferencesREDES / Friends of the Earth Uruguay http//www.redes.org.uy/LObservatori de las Transnacionales (LOT), query group focusing on Spanish TNCs in Latin-America. Contact David Llistar david.llistardebtwatch.org expiration Mexicana de Accion Frente al Libre Comercio (RMALC) http//www.rmalc.org.mx/Transnational Institute (TNI) http//www.tni.org/altreg/index.htmCorporate Europe Observatory (CEO) http//www.corporateeurope.org/Alianza Chilena Por Un Comercio Justo y Responsable (ACJR) http//www.comerciojusto.cl/index.htmAsociacion Latinoamercana de Organizaciones de Promocion (ALOP) http//www.alop.or .cr/