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Mercosur seeks more Pacific partners for commodities, goods

April 30, 2013 at 7:04 PM   |   Comments

SANTIAGO, Chile, April 30 (UPI) -- As Europe struggles with multiple eurozone crises and economic downturn, emergent Latin America is tilting toward the Pacific region as a potential major partner for its diverse inventory of commodities, processed goods, minerals and other raw materials.

Latest European moves to seal a free trade pact with Mercosur regional trade bloc received mixed response amid new misgivings about a trans-Atlantic commercial partnership with Europe, a long-delayed project.

European nations cold-shouldered Latin America for years, then changed tack and started pushing for a free trade deal in 2010, a year marked by economic boom in most of Central and South America after recovery from the 2008-09 crisis.

Latin America's Mercosur member nations responded with enthusiasm but European dairy and livestock farmers rose in revolt against a region they feared could put them out of business.

The European farmers' protests muted public EU pronouncements of a possible trade deal with Latin America but the union's economic fortunes raised hopes in Brussels that free trade with the region would open new opportunities.

Mercosur members Argentina, Brazil, Paraguay, Uruguay, Venezuela and associate nations command a total bloc income of $3.5 trillion. Mercosur's population of 275 million is seen in Europe as a potential consumer market for EU exports.

But as a free trade deal again eludes the European Union and Latin America, regional nations see more prospects in the Pacific. Last year Chile, Colombia, Mexico and Peru announced they would promote a newly formed Pacific Alliance as an alternative trade bloc.

Chilean President Sebastian Pinera declared the Pacific Alliance as "much more than a free-trade agreement. It is an agreement of deep and broad integration that involves the exchange of goods, services, investment, people, and at the same time is committed toward physical, infrastructure and energy integration."

The alliance includes Chile, Colombia, Mexico and Peru but aims to expand further east.

Colombian President Juan Manuel Santos described the new bloc as "one of the most significant processes toward integrations that have taken place in Latin America."

The new economic bloc has a combined population of 204 million (36 percent of Latin American population), a gross domestic product of $1.7 trillion and global trade of more than $1 trillion.

The volumes are set to grow as the alliance looks further eastward. Left-wing critics of the Pacific Alliance say it is a U.S.-backed group to counteract populist left-wing influence in Mercosur.

German Chancellor Angela Merkel attended EU talks with the Community of Latin American and Caribbean States in January to push for a regional trade agreement.

Merkel was unperturbed by Cuba, backed by Mercosur's left-wing states, assuming leadership of CELAC.

She told the international gathering in Santiago Europe backed open markets and closer links between the European Union and Latin America. Merkel's pronouncements contrasted with comments by Argentine President Cristina Fernandez de Kirchner, who called for new terms to build future trade ties with Europe.

The previous terms of free trade were no longer applicable, Fernandez said.

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