French President Jacques Chirac's recent 10-day tour of Latin
America was rich with symbolism (echoes of Charles de Gaulle's
historic 1964 visit) and substance (promotion of European and
French goods and technology).
While laying the groundwork for a major conference of European
and Latin American officials to be held next year, he made no bones
about his ultimate objective, stating repeatedly his wish that
Mercosur - the burgeoning common market of South America - look to
Europe rather than the United States for future trade growth.
President Clinton has delayed until October a similar mission to
the region to promote the long envisioned Treaty of the Americas.
Fully 25 percent of Mercosur's imports are now supplied by the US,
and as Mr. Clinton noted pointedly in his State of the Union
address, Latin America is the second fastest growing region in the
world, after East Asia, with 5 percent annual increases in gross
domestic product (GDP) forecast for the next five years.
In light of this high-profile economic diplomacy, and the recent
Mercosur agreements concluded with Chile and Bolivia, it is a good
time to take a closer look at this dynamic new entity in South
Known also as the Southern Cone common market, Mercosur was
created on March 26, 1991, when the Treaty of Asuncion was signed
by Argentina, Brazil, Uruguay, and Paraguay. The Treaty guarantees
free movement of assets, services, capital, and people within
Mercosur; abolition of customs duties among members; and the
establishment of a common external customs duty.
Mercosur became operational on Jan. 1, 1995. Last October,
Mercosur's doors opened to Chile and, just last month, to Bolivia.
A full customs union is to be established on Jan. 1, 2001.
In effect, Mercosur is in a period of transition comparable to
that of the European Union (EU) between 1958 and 1968. The degree
of economic integration that it has achieved places it - vis-a-vis
the rest of the world - midway between NAFTA's commercial
free-trade area and the EU's combination of economic integration
and partially integrated foreign policy.
Mercosur's sheer economic power would be hard to overstate. With
Chile and Bolivia included, it can lay claim to a GDP of $1.1
trillion, which represents three-quarters of South America's
economic activity. Mercosur accounts for three-fourths of the
continent's trade, nearly three-fourths of its population, and more
than three-fourths of its land mass.
Some experts, however, have raised questions about whether this
system truly serves the interests of its member states' consumers. …