Delivered in Plenary - 25th September 2007
In the past I was a champion of EU-driven regional integration in Latin America through preferential support for regional multilateral blocs, such as Mercosur. But, regrettably, in spite of the closeness of its constituent countries (Argentina, Brazil, Paraguay and Uruguay) culturally, Mercosur remains too weak politically compared to national interests, therefore impeding an EU-style single market in the region – although this, of course, should be our long-term objective.
Mercosur’s functioning is worsened by the recent decision by Venezuela to join, with Chávez’s anti-free-market rhetoric leading to even more protectionism in Mercosur, whose talks with the EU have for some time now been stalled. Therefore, I welcome the fact that the EU is instead championing a strategic bilateral partnership – as agreed this July – with Brazil, which is an economic giant, but one whose share of global trade is still small in comparison to other developing countries, precisely because Brazil has failed to sign profitable bilateral free-trade agreements, placing too much faith in Mercosur.
Unlike Mexico, which already has a deal with the EU and is the other dominant player in Latin America today, Chávez’s petrodollar generosity towards Argentina has forced President Lula of Brazil to ignore Mercosur issues and allowed President Kirchner of Argentina to further his protectionist stance.
Populist Ecuador is also making noises now, joining Mercosur in spite of joining the anti-US, Venezuelan-led Bolivarian Alternative for the Americas (ALBA) trade initiative.
One recent spat between Argentina and Uruguay clearly demonstrates the lack of effectiveness of Mercosur in resolving its partners’ differences over the pulp mill being constructed by an EU Finnish company, Botnia, on the banks of the River Uruguay. President Kirchner failed to stop the project, and at the same time antagonised his neighbouring country – and Mercosur partner – Uruguay by refusing to allow Mercosur’s supranational institutions to arbitrate this dispute. Instead, what did he do? He called in the King of Spain to arbitrate.