Venezuela industry not keen on Mercosur membership, sees risks

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CARACAS, Venezuela, April 28 (UPI) -- Venezuela's beleaguered business and private industry sector is up in arms over efforts by President Hugo Chavez to fast track the country's economic integration with Mercosur as soon as he wins ratification of a long-delayed membership.

Venezuela's membership of the trade bloc is snagged by the Paraguayan Parliament's opposition, mainly in response to what critics cite as the controversial style of governance under Chavez but also because of that country's internal squabbles.

Other Latin American critics, including Brazilian lawmakers, fear Chavez may harm the trade bloc rather than bring it tangible rewards. But they have given the go-ahead for Venezuelan membership, leaving Paraguay as the stumbling block.

Support for Venezuela's membership of the trade bloc is based on expectation that the country's final admission to the group will open a huge consumer market for other partners.

The Venezuelan industry strongly differs, fearing unfair competition from neighbors and a slow demise of the country's struggling industries, already hurt by recession, lingering effects of a drought and crippling power and water shortages in 2009 and 2010.

Chavez intensified his drive for Mercosur membership after he took Venezuela out of the Community of Andean Nations this month, arguing the country's interests would be better served by strengthening bonds with Mercosur.

Mercosur was founded in 1991 and includes, as full members, Argentina, Brazil, Paraguay and Uruguay and, as associates, Bolivia, Chile, Colombia, Ecuador and Peru.

The strongest opposition to Mercosur membership came from Ismael Perez Vigil, executive president of the Venezuelan Confederation of Industries.

"Incorporation to Mercosur at this moment is really harmful for Venezuela's industry," he said, adding the industrial sector was already weakened by the government policies.

Venezuela's private sector couldn't stand up to better-developed manufacturing rivals in Argentina and Brazil, he said.

The Mercosur membership issue came up when academic and business leaders and lawmakers gathered to debate possible consequences of Mercosur membership.

The Venezuelan comments oddly echo protests voiced by European agriculture industry leaders fearful of competition from Mercosur's farming and livestock sector. The European Union and Mercosur are locked in inconclusive talks on a new trade pact giving the two sides freer access to each other's markets.

Jose Guerra, dean of the Central University School of Economics, said Venezuela's incorporation in Mercosur would be hasty, as "Venezuela simply is not prepared" for the challenge.

Having a common external tariff with Brazil, one of the world's leading economies and competing with Argentina, an agricultural power, "was too much for Venezuela and threatened the local manufacturers and farmers," he said.

Supporters of Mercosur membership argue that Mercosur isn't only about trade tariffs and other benefits may accrue to Venezuela.

Meanwhile, Paraguay's ratification of Venezuela's membership of Mercosur remains mired in domestic politics and an ongoing power struggle between President Fernando Lugo and the National Congress.