EU economic relation with MERCOSUR Essay

IntroductionMERCOSUR ( southeasterlyern Common Market) was established in 1991 as a customs union and common market surrounded by Argentina, brazil nut, Paraguay and Uruguay. Chile and Bolivia later joined as associate Mercosur members. Since mid-2000, they stupefy been booked in negotiations with the EU to establish a assoil trade discipline covering both regions.History in the MakingOn may 28, 2004, EU and MERCOSUR trade representatives convened in Guadalajara, Mexico to continue an ongoing negotiation process. MERCOSUR holds a comparative advantage in a wide range of unsophisticated produce, which composes to a greater extent than half of its total exports, while atomic number 63 is particularly muscular in industrial and capital markets, such as automobiles, telecommunications and banking.Their complementary economies attend ideally suited for engaging in free trade, with each dower of the bloc specializing in their specific fields of strength. However, signifi endurec e quotas and tariffs, intended to protect MERCOSUR members infant industries as well as high cost europiuman farmers, present mountainous obstacles to the realization of any free trade accord. At the May 28 summit, both sides tentatively agreed to open their markets to distant opposition. The EU and MERCOSUR have each shown a testamentingness to make difficult concessions in order to see their negotiations come to fruition.The Border is ClosedThe European joints protectionist agriculture regulations insulate locally grown produce from opposed competition. Cultivatable land, a precious and scarce commodity on the continent, is inordinately 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 i nternational competition by the raising of its quotas and the lowering of its tariffs. However, European negotiations have juvenilely make important concessions aimed at expediting the process. The EU Common Agricultural Policy of 2003, which importantly reduced Europes farm subsidies, coupled with an increase in import quotas and a lowering of tariffs, have strengthened MERCOSURs self-confidence in the positive outcome of trade dialog.Europes disinclined acquiescence to MERCOSURs demands is an attempt to pursue a strategy aimed at obtaining greater entree to South the Statesn markets where European industries and sectors (such as automobile, telecommunication, banking and electronic computer production) have excelled in the past and appear to have an redden 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 indust ries are too pocket-sized, it maintains, to compete in the world market, and therefore opening its borders at this time could destroy internal firms. However, the South American Common Market has recognized the significance of Europes offer, and in return, has allowed for ever greater access to its telecommunication and banking industries.Partners in DecayThere is a downside to the growing ties between Europe and MERCOSUR. Europes courting of MERCOSUR is at best undermining the fabric that binds the fragile G20 together. G20 members misgiving that the EU-MERCOSUR treaty could provide unfair access to markets, which would be illegal consort to the World allot Organization (WTO) standards.According to these, Most Favored population Status (MFN) cannot be reserved for specific countries, except must be shared among all applicable WTO members. According to some G20 members, including China, India, South Africa and Brazil, the European Unions closing to engage in trade talks wit h MERCOSUR is a stratagem to undermine the G20, an organization that could potentially cause sober problems for both the EU and the unify States.Restructuring the MapAn accord between the both giant vocation blocs has the potential to upset and shift the balance of world forefinger in the global trade arena, not only affecting the G20 but also challenging US economic hegemony in the horse opera Hemisphere. A leading light in the Cairns separate of agricultural exporters and a founding member of the G20, Brazils political clout in the worldwide community is growing exponentially. Its ability to command greater respect in political and economic agreements has persuaded the EU to offer greater concessions to MERCOSUR and is forcing the get together States to explicate its position on the Free Trade Area of the Americas (FTAA).There is no doubt that Brazil is using the EU-MERCOSUR trade agreement, and the commercial bonanza it should bring, as a weapon to increase its bargain ing power in outgoing FTAA talks with Washington concerning farm subsidies. The election of two left-leaning presidents in Brazil and Argentina, as well as a shift away from a Western Hemisphere trade pact toward a more fond courtship with Europe, reflects a fundamental change in Brazilian and Argentinian politics as well as in their strategy 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 do 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 confirmed pessimist MERCOSUR to forecast across the Atlantic for an opportunity to further its global thrust and self-interests. The United Statess reluctance to discu ss any reductions in farm subsidies during new-fashioned 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, prepared to equate or even replace the United States as the dominant trading power on the South American continent. The United Statess hegemonic condition 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 forced to compromise.The EU-MERCOSUR free trade agreement without a question is a threat to the United Statess dominance in the region. Europes belated decision to open its agricultural markets to foreign competition leaves Washington in a precarious position at the negotiating tab le with its Latin American counterparts. Previously, the EU and the US held the same line regarding agricultural subsidies both argued that the subject should be addressed at future WTO trade rounds rather than through isobilat sequencel trade agreements. If it now wishes to remain competitive with Europe in the South American market, Washington will have to address the issue 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 longer stockpile to walk away from negotiations with a victory in hand which places Latin America in a dependent position in the FTAA. simoleons Bottom US-Latin American RelationsThere is no question that US-Latin America dealings are at their lowest point in a generation. Clearly, when it has come to leadership and a strong moral stance regarding US policy initiatives towards Cuba, Venezuela and Haiti, Secretary of State Powe ll has provided no leadership and certainly 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 existence on disseminating public disinformation along with a capacity for extremist politics that have done incalculable damage to the maintenance of a balanced and trusty 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 hardly serves that word, make full as it has been with vulgar rhetoric, meretricious analysis, Rasputin-like conspiracies, and an inability to distinguish responsible carriage from that of a low qua lity goon. He, together with his fellow alumni from former Senator Helmss tawdry regional policy-making workshop at the Senates foreign relations committee, the State of Departments Roger Noriega and Dan Fisk, have gone a long way to pollute US hemispheric ties so basically 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 retention company which it controls now that Europe has presented itself as a viable guerilla option for a binding trade relationship.Living in an era of increasingly free global trade, the EU-MERCOSUR pact could be a smart 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 major hemispheric econo mic force, even if both are achieved. As the United Statess soft power continues to decline in the region, Europes global stock 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 draw talking to Latin America.Internet ReferencesREDES / Friends of the Earth Uruguay http//www.redes.org.uy/LObservatori de las Transnacionales (LOT), research group focusing on Spanish TNCs in Latin-America. Contact David Llistar david.llistardebtwatch.orgRed 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/