SUNS  4344 Monday 14 December 1998



MERCOSUR SUMMIT GLOSSES OVER DIFFERENCES

Rio de Janeiro, Dec 10 (IPS/Mario Osava) -- The presidents of the Southern Cone Common Market (Mercosur) member states, and associates Bolivia and Chile, ended their meeting here Thursday with declarations and agreements that represented small advances while glossing over smouldering disputes.

An extradition accord, the creation of a Forum for Political Consultation and Concertation, another forum to recommend anti-drug measures and a three-year plan for the educational sector were some of the positive results to come out of the 15th meeting of the Common Market Council - Mercosur's executive organ.

A Protocol for the Harmonisation of Industrial Design Norms was also signed, as well as a resolution offering contractual safeguards for consumers, regulations for the Conflict Resolution Protocol and measures to simplify customs procedures.

Still pending are the two "hottest" trade questions - in the words of Brazilian Foreign Minister Luiz Felipe Lampreia: the automobile industry and sugar.

Argentina and Brazil agreed on a common tariff for the car industry - the source of heated disputes as road vehicles are the chief products traded within the bloc, accounting for a full one-third of intra-bloc trade, according to the two countries' ministers of industry, Alieto Guadagni and Jose Botafogo Gonzalves, respectively.

The key to overcoming differences between the two countries was an agreement on a transition period - from the year 2000 to 2004 - during which the flow of trade and investment will be "administered."

As of the year 2000, all tax breaks will be prohibited, with the exception of those approved by the bloc's four full members (Argentina, Brazil, Paraguay and Uruguay).

The common external tariff will be 35% for all vehicles imported from outside Mercosur -- except tractors, harvesters and railway machinery, which will pay an 18 percent duty. Imports of auto parts will be charged a 14, 16 or 18 percent tariff.

But the accord is still pending approval by Paraguay and Uruguay, which charge lower duties on vehicles imported from the rest of the world - 10 to 15 percent in the case of Paraguay and 20 percent in Uruguay.

For Mercosur's two smallest members, increasing the common foreign tariff to 35 percent effectively means offering their national markets as captives to the two biggest partners, which account for nearly the entire production of vehicles within the bloc.

While Paraguay has no automobile industry and Uruguay produces a mere 15,000 vehicles a year, Brazil churns out 1.6 million and Argentina 400,000,

In order for vehicles to carry the "Made in Mercosur" label, 60 percent of the inputs will have to come from within the bloc.

In the case of sugar, the only thing agreed on was that a technical working group in the Trade Commission would continue negotiating and attempting to work out disputes.

Argentina charges a 23 percent duty on imports of Brazilian sugar, and refuses to include the product in the bloc's free trade accords as long as Brazil continues to subsidise local production.
The Brazilian government and producers, meanwhile, deny that local sugar is subsidised.

Argentina's Minister of Industry Guadagni reported that as a gesture of goodwill aimed at facilitating a future accord, Argentina would cut the duty it charges Brazilian sugar imports to 20.7 percent.
Bolivian President Hugo Banzer, meanwhile, referred to the "gloomy outlook" for Southern Cone countries presented by the international financial crisis. A 30 percent crash in commodity prices to "the lowest level seen in decades," the subregion's growing trade deficit, a drop in domestic savings, a slump in production and rising unemployment all give rise to a "disturbing panorama," said Banzer. In an effort to downplay any negative aspects of the summit, Banzer and his counterparts underscored the deepening of the regional integration process as the best way to confront the effects of the crisis and globalisation.

Unity is even more crucial "in the face of the stormy recession that lies ahead," said Brazilian President Fernando Henrique Cardoso. Mercosur must "minimise its internal differences" and unite in the face of international market barriers, he added.

Mercosur - which accounts for 80 percent of South America's combined gross domestic product (GDP) - has "more problems outside than within," especially because of European agricultural subsidies and U.S. barriers to manufactured goods, Cardoso concluded.

The final declaration signed by the six presidents on Thursday, the 50th anniversary of the signing of the Universal Declaration of Human Rights, also contained a condemnation of "the unilateral and
extraterritorial application of national laws" in violation of "the legal equality and sovereignty of states."

That clause reflected a North-South conflict. According to Chilean President Eduardo Frei, Europe uses two standards while forgetting its own crimes against human rights. He pointed to "Spain's poor memory," the "genocide" in the former Yugoslavia, Irish terrorism and European support for brutal African dictatorships.

Spanish judge Baltasar Garzon should be asked "if he has tried one single member of (Francisco) Franco's dictatorship," said Argentine President Carlos Menem - referring to the magistrate who issued an arrest warrant and extradition request for former Chilean dictator Augusto Pinochet.

Pinochet has been under arrest in London since Oct. 16. On Wednesday, British Home Secretary Jack Straw decided that extradition proceedings against him could go ahead. Garzon issued the indictment against Pinochet Thursday, and the extradition trial begins Friday.

Uruguayan President Julio Sanguinetti said there were two doctrines. The first, which can be seen in Latin America, is based on the legal principle that "offenses that have occurred in any country are
exclusively tried in that territory," he said.

But the United States and Europe "have different standards," Sanguinetti maintained. The United States, for example, invaded Panama to capture Gen. Antonio Noriega in 1989 and try him in U.S. territory, where he was sentenced to 40 years in prison. And in Europe, Italy recently denied Turkey's extradition request for Kurdish guerrilla leader Abdullah Ocalan.

Frei issued a call to defend the concept of legal territoriality, saying that without that, "small countries will never be respected."