Killing Time

Divide and Conquer

This should all be borne in mind when we hear bleating about civil rights and so forth in Venezuela and Bolivia.

'On January 25, Uruguay signed a Trade and Investment Framework Agreement (TIFA) with the United States that could ultimately dismantle Mercosur and isolate Uruguay in the southern cone....A TIFA, many practiced trade experts say, is often the prelude to a Free Trade Agreement (FTA). If Uruguay ultimately decides to sign a FTA with the U.S.— an option now being heavily debated and which Uruguayan officials have not ruled out—it would come in direct violation of Montevideo’s membership terms in Mercosur. Due to this dispute, Mercosur stands precariously at the brink of unraveling at a time when bilateral disputes and diverging agendas of the five full members seem to be taking center stage at the expense of their solidarity and all-important economic cohesion.....Despite Vázquez’s provocative TIFA signing with the U.S., opposition to a U.S.-Uruguay trade deal remains strong within his own country. Reinaldo Gargano, Uruguay’s foreign minister, strongly opposes a FTA with the U.S. In his support of Uruguay’s ongoing allegiance to Mercosur, Gargano stressed “I continue working for a better Common Market of the South.”.....The question still remains why the U.S. is pushing so emphatically for trade arrangement with Uruguay, with which, relatively speaking, it has only a negligible volume of trade. With a GDP of just $13 billion, a bilateral deal between Uruguay and the U.S. would be, according to the Financial Times, “economically insignificant for the US.” Yet the U.S. still pushes the merger. In truth, the major incentive behind the U.S. desire to sign a FTA with Uruguay may be less about what’s best for the small nation and more about working to unravel Mercosur and build up White House diplomatic and economic leverage in the southern cone.....Unquestionably, Mercosur is viewed by Washington as posing a threat to U.S. interests in South America. The bloc directly and successfully thwarted the now floundering U.S.-planned Free Trade Agreement of the Americas (FTAA), designed to unite all of Latin America and North America (except Cuba) in a hemispheric trade arrangement. Mercosur prohibits its members from signing FTAs with the U.S., and it is actively recruiting a South American trade bloc that would unify all of the region’s nations. The proposed Bank of the South, one of the potential projects of Mercosur, would offer an alternative source of finance to the International Monetary Fund (IMF) and other multilateral organizations—such as the World Bank—which do not necessarily have the best track record in favoring genuine development initiatives in Latin America.....Mercosur’s international influence is rising, and, so long as all its members play on the same team, it is likely to continue in this direction. The five full members of the trade group alone represents 250 million people over a span of 4.9 million square miles, with a GDP of $1 trillion. Whatever its shortcomings, the bloc provides its smaller members the ability to compete in the international community for more equal trade agreements.....If Mercosur fails in South America, it will open up the entire region to the possibility of being cherry picked (on a one-by-one basis) by individual trade agreements with the U.S. In its effort to sign an FTA with Uruguay, the U.S. may be taking advantage of a small, disenchanted Mercosur member in hopes of compromising South America’s existing trade bloc structure and shattering many of the region’s important aspirations.....An FTA between Uruguay and the U.S. would destroy the last indigenous economic bloc powerful enough to prevent the U.S. from extending its fingers into all of Latin America. The world has seen what happens to small scale entrepreneurs, be they farmers or businessmen, as well as the fate of some of the smaller and weaker nations, when the U.S. is granted free trade rights within these less developed nations’ borders. Being placed under the mantle of FTA’s far from guarantees a mutually beneficial relationship. Newspaper dailies run recurrent stories about Mexican farmers and small businesses entrepreneurs who are unable to effectively compete with U.S. multinationals, and who are at times forced out of business by their highly competitive U.S. counterparts. Mercosur exists to unite South America under its own collective terms and to give smaller nations like Uruguay the necessary leverage to make substantial demands upon its trade partners. The U.S. is pushing for a South America that trades on the White House’s terms, under a FTAA. Uruguay is but the next step for it to project that influence.'

posted by Brendan @ 10:55 AM