S. American leaders aim for trade pact

S. American leaders aim for trade pact

Mercosur and the Andean Pact, the two largest economic blocs in South America, have reached an agreement to negotiate a trade agreement that would eliminate tariffs between the two regions. "We've knocked down the barriers to regional trade,'' Argentina's deputy foreign minister Martin Redrado said in a statement.

Representatives of Argentina and Brazil have agreed on the basics for an agenda that will be implemented over the next six months when Brazil chairs Mercosur, the South American economic bloc. "We want something on the line of the European Economic Community model, a South American union eventually larger than the EC, but which we are determined to launch during the pro tempore chair of President [Luiz Inacio] Lula [da Silva]", said former Argentine president Eduardo Duhalde.

According to Duhalde, the project will involve the following countries: Mercosur's four permanent members of Argentina, Brazil, Paraguay and Uruguay; Mercosur associate member Chile; and the Andean Community countries -- Bolivia, Peru, Ecuador, Colombia and Venezuela. Preliminary negotiations between the two groups have been going on since 2001.

Brazilian and Argentine leaders said Mercosur expects to implement a "golden clause" to facilitate faster integration for those countries willing to advance, without hindering the rest. It will also establish a Structural Fund with $100 million to provide support for the weakest Mercosur economies. A 0.1 percent levy on all Mercosur internal and external transactions would help finance the fund.

"It's similar to what Germany and France did to support weaker members such as Spain, Greece and Portugal. In this case, Uruguay and Paraguay would be the immediate beneficiaries," said Duhalde.

-- Alan Field