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TRADE WARS
Mercosur discord eased by Paraguay deal

disclaimer: image is for illustration purposes only
by Staff Writers
Asuncion, Paraguay (UPI) Dec 15, 2010
Latin America's Mercosur trade pact is going through a rare period of constructive cordiality after member countries reached agreements to solve two intractable problems -- discord over Venezuela's membership and an Argentine-Paraguay row over river transport that threatened to scuttle the group's next summit.

Paraguayan ratification for Venezuelan membership, delayed over many years, became a near certainty after a congressional deal that had been delayed due to domestic politics.

Venezuela became a full member of Mercosur in 2006 but was denied membership privileges as Paraguay's Congress squabbled over the pros and cons of having populist Venezuelan President Hugo Chavez as a member.

Paraguayan assent was the last hurdle after other founding members -- Argentina, Brazil and Uruguay -- gave legislative approval.

Venezuela sought membership as a matter of national pride and prestige but Mercosur's rise as a potential major partner for European Union means both Caracas and EU can look to bigger markets for trade.

In the next stage, the Paraguayan Senate will vote ratification for Venezuela's Mercosur membership as part of a government-opposition deal apportioning key executive and judiciary posts between the two sides.

Paraguay hopes to gain from Venezuela's membership through increased trade and financial flows from oil-rich Venezuela and other Mercosur partners. The deal increases the trade zone likely to be available for EU exports to Latin America.

The Mercosur region includes Bolivia, Chile, Colombia, Ecuador and Peru as associate members that will also benefit when talks with the EU lead to comprehensive accords on trade partnerships, including agricultural and raw materials exports to Europe.

In the second breakthrough this week, Mercosur averted a major crisis in its ranks after Argentine maritime workers blocked landlocked Paraguay's river transport goods. Argentina relented after Paraguayan President Fernando Lugo threatened to boycott the Mercosur leaders' summit this week.

The agreement to lift the blockade was reached after Argentine President Cristina Fernandez de Kirchner met with the Argentine Maritime Workers Union, which triggered the blockade apparently in sympathy with its Paraguayan co-workers.

More than 7,000 containers with goods bound for Paraguay are stuck in the port of Buenos Aires.

Paraguayan Foreign Affairs Minister Hector Lacognata said Argentine authorities had given assurances the Argentine river transport workers would be dissuaded from resuming their blockade.

Paraguayan transport industry executives said the Argentine union had manufactured an excuse for the blockade as there was no problem with river transport workers in their country. Paraguayan officials accused Argentine union leaders of engineering the blockade as an attempt to dominate the river transport system.



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