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[ View Forums | Start New Topic | Search ]     [ Join | Login ] Post Reply    Forum  Café Brazil    Topic  FT Latin America Agenda - The mess in Mercosur *  Subject  *  Message  <QUOTE>Posted by BrazilMax:<BR>FT Latin America Agenda - The mess in Mercosur January 14 Edited by Richard Lapper, Latin America editor The mess in Mercosur Expect Mercosur to get into an even bigger tangle when leaders of the five members of the South American customs union meet in Rio de Janeiro on Thursday for a two day summit. And Venezuela which joined the group last year is likely to be central to any controversy. On the one hand, the radical President Hugo Chávez can be relied upon to irritate his more cautious Brazilian hosts by grandstanding about the benefits to the region of "21st Century Socialism". On the other, the bid by Venezuela's ally, Bolivia, to become the sixth member of the club is going to create a headache for negotiators. Bolivia is currently an associate member like Chile, Colombia, Ecuador and Peru. If it were to join Bolivia would have to agree to accept Mercosur's common external tariff, which at an average of about 12 per cent is much higher than its own average of about 5 per cent. That would require a disruptive hike in protection. But any move by Brazil, Argentina and Venezuela to allow an exception would increase frictions with Uruguay and Paraguay, the two smaller Mercosur members who have tried unsuccessfully to negotiate their own more flexible application of the external tariff rules. Brazil's left-turn? The timing was bad, but Brazil's announcement that further concessions for private companies to run federal highways have been suspended does not mean that President Luiz Inácio Lula da Silva is embarking on Hugo Chávez-style state socialism. The announcement, its subsequent partial retraction, and an extraordinary statement soon after by Brazil's deputy attorney general comparing highway concession holders to drug traffickers, do, however, suggest something almost equally worrying - a lack of direction in policy making at the highest levels of government. As one member of the highway concessions industry said on Friday: "This government is completely lost and doesn't know which way to turn." It is bad enough that the issue of whether private companies should run public services is under discussion again a decade after Brazil put its first highway concessions out to tender. Merely re-opening the debate has rattled investors, just as the government urgently needs to find new sources of capital to fund a much-needed overhaul of transport infrastructure. What is worse is that the macro-economic stability won at great cost by the previous government and largely maintained during the first Lula administration may now itself be under threat. As at least one commentator has noted, Brazil's fiscal responsibility law, one of the cornerstones of stability, is no longer being respected as it should. If this is a trend to be continued, it is policy drift of the worst type. Notes by Richard Lapper, Jonathan Wheatley, Adam Thomson and Benedict Mander</QUOTE> on (Email Addresses and URLs will be automatically converted to links) on (Links, Images and Bold, Underline and Italic are allowed) *  Username  No Username? Join! *  Password  Forgot Password?    Use Signature?  Yes No    Lock Topic?  Only a moderator may lock this Topic.     * Indicates a required field. Brazilmax.com Home | Brazilmax.com Forum | Contact Us ©2003 - Powered by Cold BBS :  Version v2.0