[LINK] "Latin America Already Has the Trade Deal It Needs"

[rfmcdonald]

Bloomberg View's Mac Margolis writes about poor Mercosur. Is the Common Market of the South, founded on a deal between Brazil and Argentina, salvageable at this stage?

When it kicked off in 1991, Mercosur, the abbreviated name for the Mercado Comun del Sur, or the "South American Common Market," looked like a winner. Latin America had cashiered its dictators and begun to open its borders. Free trade winds were blowing, and the region's emerging democracies wanted to join forces to cash in on the global bonanza.

[. . .]

A renewed Mercosur would lead the way. On paper, the trade bloc is a juggernaut. If it were a country, it would have the world's fifth-largest economy and a population of 295 million.

Solidarity made a good bumper sticker, but it didn't translate easily into good trade policy. As the raw materials boom subsided, markets retracted and protectionism returned. Governments raised non-tariff barriers and imposed import quotas against their neighbors.

The customs union announced in 1994 ought to have been completed by 2006. With luck, said Lia Valls, trade expert at the Getulio Vargas Foundation in Rio de Janeiro, "the agreement will be in place by 2018 or 2019."

Meantime, just about anything goes. Some trade analysts estimate that up to half of the goods traded between Mercosur partners do not benefit from the reduced common tariff. "Uruguay does what it wants. Argentina doesn't want free trade, and Brazil doesn't lead," Mauro LaViola, head of Brazil's Export Association, told me.