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South Americans to meet on Paraguay, China trade
by Staff Writers
Mendoza, Argentina (AFP) June 27, 2012

Foreign ministers of the South American trading bloc Mercosur meet here Thursday with the ouster of Paraguay's president and a proposed free trade agreement with China on the agenda.

"The foreign ministers are expected to draw up a document condemning Paraguay for the abrupt dismissal of (president Fernando) Lugo," which will be presented to their presidents at a summit Friday, an Argentine foreign ministry source said.

Lugo had planned to address the presidents, but announced on Tuesday that he would not go. Paraguay's new President Federico Franco also is staying away after the group suspended his government's membership over Lugo's ouster.

The meeting will bring together the leaders of the group's other full members -- Brazil, Argentina and Paraguay -- as well as associate members Chile, Bolivia, Venezuela, Peru, Ecuador and Colombia.

Despite the likely statement of condemnation, Paraguay's central bank said the group will not impose economic sanctions on the country, 55 percent of whose exports are to Mercosur countries.

Meanwhile in Asuncion, the Franco government welcomed a decision by the head of the Organization of American states to lead a fact-finding mission to Paraguay.

The Washington-based regional security organization failed to reach a consensus Tuesday on how to respond to the crisis in Paraguay after a four-hour session.

Lugo was impeached and ousted by a 39-4 vote by the Senate on Friday that was widely denounced for not allowing the president time to mount a proper defense against hastily brought charges of malfeasance.

The vote stemmed from a June 15-16 clash between police and squatters in a land dispute that left 17 dead -- 11 landless peasants and six police.

Besides Paraguay, the Mercosur foreign ministers also are expected to discuss a proposal by China's Prime Minister Wen Jiabao, during a visit to the region this week, for a free trade zone encompassing China and the Mercosur countries.

Analysts in Brazil and Argentina were skeptical that such an agreement could be reached over the short term, or that it would significantly benefit the region.

"There are many questions about a free trade agreement because the region sells China mainly commodities that already enter that market virtually without restriction because of China's need for food and other primary products," said Mauricio Claveri, a foreign trade analyst with the consulting firm

Claveri said industrial products account for barely 4-5 percent of Mercosur's total exports to China.

China exported $48.5 billion in products to Mercosur countries in 2011, and imported $51 billion, according to official statistics.

"China is a very important ally, but I am not optimistic about this possible accord. Mercosur's most important trade negotiation is with the European Union, and if that is stalling, I don't see how you can make progress now on an agreement with China," said economist Gilmar Maseiro in Brazil.


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