Chávez in Brazil for region's trade bloc talks

VENEZUELAN PRESIDENT Hugo Chávez was due to arrive in Brazil last night to take part in the summit that will see his country join South American trade bloc Mercosur amid controversy.

Six years after it signed an adhesion protocol, Venezuela will finally gain admission after the suspension of Paraguay from the bloc for its congress’ lightning impeachment of president Fernando Lugo last month.

Mercosur’s other members – Argentina, Brazil and Uruguay – suspended Paraguay, saying the impeachment threatened the bloc’s commitment to democracy. But they immediately used the decision as an opportunity to get around Paraguayan opposition to Venezuelan membership.

Founded in 1991 under the Treaty of Asunción and updated by 1994, Mercosur aims to promote free trade and the fluid movement of goods, people and currency among member states.

Paraguay’s conservative congress had refused to ratify Venezuela’s admission into Mercosur delaying the process for years, much to the frustration of President Chávez’s socialist administration.

But at a meeting in Mendoza on June 29th the presidents of Argentina, Brazil and Uruguay decided Paraguay’s suspension meant its approval of Venezuela’s entry into the bloc is no longer required.

That decision was reportedly against the advice of their foreign ministries and has led to criticism from leading jurists and former diplomats in the region who say the move is illegal and threatens the judicial integrity of the bloc, which was founded with ambitions to become a South American version of the European Union.

“The adhesion protocol clearly requires the ratification of all four existing members before it can come into effect. Paraguay’s suspension does not invalidate its membership of the bloc or the need for unanimity in agreeing to the adhesion of Venezuela,” says José Augusto Fontoura Costa, professor of international law at the University of São Paulo. “Venezuela’s adhesion is therefore outside the judicial norms of Mercosur.”

Paraguay’s new government is furious at what it sees as its regional partners’ disregard for its rights. It sought to overturn its suspension and the admission of Venezuela in Mercosur’s permanent court but, in a decision described by Paraguay as “unacceptable”, the court ruled against it.

The left-wing governments of Argentina, Brazil and Uruguay have all hailed Venezuela’s admission as a necessary step for consolidating regional unity. But its precipitous nature has created tensions.

In Uruguay vice-president Danilo Astori labelled the manoeuvre “the biggest institutional wound” in the bloc’s history.

“The complaint against Paraguay that led to its suspension was that it dispatched the president in a hasty and unseemly way that did not admit any of the due process needed for what might be considered a fair outcome. But the response of letting Venezuela in was just as hurried, just as unseemly and just as lacking in due process,” says Peter Haki of the Inter-American Dialogue, a Washington think-tank.

The admission of Venezuela is likely to add to the obstacles that have hindered efforts to create a genuine free-trade zone in the region.

Mr Chávez’s government has yet to harmonise his country’s customs and tariffs regime with those of the other members.

Already Mercosur is suffering from tensions as Argentina seeks to staunch the flow of dollars out from its economy by reducing its trade deficit with Brazil.

The government in Buenos Aires has imposed wildcat restrictions on imports that have led to long queues of trucks at its borders as exporters in Brazil and Uruguay struggle with improvised bureaucratic measures. The result has been a decline in inter-bloc trade.

Despite grumbling from its private sector, Brazil has largely tolerated this in an effort to prop up the economy of its third-largest trade partner, which more importantly is the main destination for goods produced by its increasingly beleaguered manufacturers.

“All this has weakened Mercosur because the rules are not being applied. Led by Argentina, measures are being taken that are against the spirit and law of the bloc. And the tendency is for this to get worse.

Mercosur was negotiated to be a free trade area but in practice this is almost over,” says former Brazilian ambassador Rubens Barbosa, who helped set up the bloc in the early 1990s.

Mr Chávez has said he wants to “decontaminate Mercosur of neoliberalism”. As a full member of the bloc, he will be in a position to frustrate the sort of free-trade agreements he has denounced as tools of imperialism.