Latin American trade blocs angry at Chile, U.S. talks

BUENOS AIRES, Argentina (Reuters) -- Chile's neighbors are infuriated at its decision to go it alone and negotiate a trade pact with the United States and say they will continue to negotiate via South America's two existing trade blocs.

Argentina and Brazil wanted to entice economically robust Chile, which opened talks with the United States Wednesday, into fully fledged membership of their Mercosur trade bloc -- which Chile maintains it still wants to do. But they are determined to stick together and jointly negotiate a Free Trade Agreement for the Americas (FTAA).

RESOURCES South American trading blocs

Meanwhile, Andean Pact members -- Colombia, Venezuela, Peru, Bolivia and Ecuador -- have also vowed to work as a bloc in the FTAA talks.

Argentine Deputy Foreign Minister Horacio Chighizola, his country's chief trade negotiator, told Reuters he was looking forward to hearing Chile's explanations for going solo at the forthcoming Mercosur summit in Brazil December 14-15.

"It's not clear what (a Chile-U.S. pact) would mean," Chighizola said, pointing out that Argentina still faces anti- dumping threats from the United States. "Argentina and Mercosur have their doors open to the FTAA."

The FTAA pact is aimed at securing free trade throughout the Americas, from Alaska to Tierra del Fuego, and Chile and the United States are pushing for a 2005 completion date, set when talks first opened in 1998.

But those talks have lost impetus as the U.S. Congress has yet to give the government the "fast-track" negotiating status many South American countries insist on.

Brazilian officials have gone further, accusing Chile of effectively backing out of upgrading its Mercosur associate membership and demanding that bloc members receive the same concessions from Chile as those it forges with Washington.

Chilean Foreign Minister Soledad Alvear met with U.S. trade representative Charlene Barshefsky Wednesday to set out the parameters of the talks. But the negotiating teams themselves are not expected to meet until at least Friday.

Brazil last week suspended negotiations with Chile on full membership of the bloc, although Alvear insisted Wednesday her government was committed to full integration.

While enjoying free trade with Mercosur -- the world's third biggest customs block, which also includes Uruguay and Paraguay -- associate membership also means Chile can keep its own import tariffs, which are lower than Mercosur's.

Andean Pact members are unlikely to follow Chile. For one thing, they are hardly in a condition to do so, with Colombia in the grip of a guerrilla war, political instability in Peru and the cool U.S. attitude to Venezuela's populist President Hugo Chavez.

"Venezuela is not, nor will it seek to negotiate bilateral deals alone, but rather with the Andean Pact regarding the FTAA," a Venezuelan Trade Ministry spokesman said.

Venezuela's Chavez has often warned that strength in numbers is the key to clinching the FTAA deal, urging solidarity with the refrain: "Either we stick together or we sink."

Chile already has trade pacts with Canada and Mexico, which are partners with the United States in the North American Free Trade Agreement. It outlined its reasons for seeking the pact with Washington in a communique Tuesday, saying it needed the agreement to secure new export markets.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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Mercosur (English/Spanish/Portuguese)
Republica Federativa do Brasil (Portugese)
Presidencia de la Republica de Venezuela (Spanish)
Presidencia de la Republica de Colombia (Spanish)
Presidencia de la Republica de Chile
Spotlight on Chile Derechos Chile (in English)

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