The Mercosur trade bloc — which includes regional heavyweights Brazil and Argentina — will make Venezuela a full member this month, uniting South America’s biggest grains and energy exporters.
At a presidential summit on Friday, Mercosur’s leftist leaders also decided to extend Paraguay’s suspension over the ouster of its former president, Fernando Lugo, until democracy is restored via new elections, scheduled for April next year.
Paraguay’s neighboring governments wanted to send a stern warning about the consequences of removing a democratically elected leader. However, they ruled out penalties that could hurt ordinary people in Paraguay and so no economic sanctions will be adopted, but officials will be banned from participating in Mercosur meetings.
Photo: Reuters
The country’s new president, Federico Franco, was Lugo’s vice president and one of his fiercest critics. Franco has defended the constitutionality of the impeachment trial, which Paraguay’s top court upheld.
Just after the Mercosur gathering, the UNASUR group of South American nations met in the Argentine city of Mendoza to discuss Lugo’s swift removal, which was sparked by clashes over a land eviction that killed 17 police and farmers.
UNASUR also suspended Paraguay, saying democracy was best defended through regional unity.
The new Paraguayan foreign minister said the decision to suspend his country from Mercosur and incorporate Venezuela was “illegal.”
“The government deplores that other member states have sanctioned Paraguay and its government so as to incorporate a new member before the conclusion of a necessary approvals process,” Paraguayan Foreign Minister Jose Felix Fernandez Estigarribia said.
The suspension opened the way for Venezuela joining the bloc since opposition in the Paraguayan Congress was the only remaining obstacle after a six-year wait.
Brazilian President Dilma Rousseff praised the joining of forces, saying “food and energy security are becoming more and more relevant” globally.
The Mercosur customs union — which groups Brazil, Argentina, Uruguay and Paraguay — also agreed to allow individual members to raise tariffs on imports from outside the bloc to up to 35 percent on 200 products to protect local industries.
This doubled the number agreed in December last year and reflected worries that dumping could increase as global growth drags. Argentine President Cristina Fernandez called on South America to band together more broadly to better confront global economic woes, just after making the announcement on Venezuela’s membership.
Venezuela has the world’s biggest crude oil reserves and belongs to OPEC. Venezuelan President Hugo Chavez has governed there since 1999 and is running for re-election again this year, despite his battle with cancer.
The Andean nation will be fully incorporated into Mercosur on July 31 at a meeting in Rio de Janeiro.
“This is a historic day for ... integration,” Chavez told the Telesur television station by telephone. “This is win-win for everybody.”
Alicia Barcena, head of the UN’s Economic Commission for Latin America and the Caribbean, said she viewed the move positively.
“Mercosur has a third of the world’s water reserves, a third of arable lands, more than 45 percent of soy production ... and now with Venezuela’s incorporation there’s an expectation that energy integration could increase,” she said on the sidelines of the summit in Mendoza.
Being a full member of Mercosur requires ending tariffs between member states and adopting a common tariff that ranges up to 20 percent, with some exceptions.
In related news, Chinese Premier Wen Jiabao (溫家寶) proposed this week that his country and Mercosur evaluate a possible free-trade agreement.
Mercosur did not address this in its final declaration. However, it released a joint statement saying officials from China and Mercosur would meet to “explore mechanisms and actions aimed at increasing and facilitating trade.”
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