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Brazil Warns Chile Against Reaching FTA with US
Brazil said the Common Market of South America (Mercosur) will seek trade compensation from Chile if it reaches free trade agreement (FTA) with the United States.
"We have the right to do so based on the accord between Mercosur and Chile," said Brazil's Foreign Minister Luiz Felipe Lampreia in Sao Paulo Thursday, December 7. He was there attending a seminar on agriculture and foreign trade.
"Negotiations have been suspended concerning Chile's full integration into Mercosur," said Lampreia.
Created in 1991, Mercosur represents a combined gross domestic product of more than US$1 trillion and a consumer market of 200 million people. It consists of Brazil, Argentina, Uruguay and Paraguay, with Chile and Bolivia as associate members.
"If Chile doesn't join Mercosur, the block won't lose strength, " said the Brazilian foreign minister.
On December 3, Chilean President Ricardo Lagos said his government had initiated talks with US President Bill Clinton's administration to sign a bilateral agreement, and that he expected the talks to continue with Clinton's successor.
Earlier this week, Lamperia criticized Chile claiming their move was "incompatible with Mercosur." Brazil's ambassador to Chile said that if an FTA is signed between Chile and the US, Chile will maintain its status as an "associate member in non-trade activities."
Lagos's speech meant that Chile might move closer to the US- sponsored Free Trade Area of the America (FTAA) a hemisphere-wide free trade zone including 34 countries from the Arctic to Argentina.
With its 800 million consumers in nations with a combined gross domestic product exceeding US$10 trillion, the bloc, if made fully operative by 2005 as the US plans, would become the largest trade bloc on earth.
However, Brazil prefers that (FTAA) move at a slower pace to give regional trade blocs, such as Mercosur and the Andean pact, enough time to solidify and merge into a South American-wide bloc capable of competing on a hemispheric scale.
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