With the firm purpose of increasing regional trade by twofold, the South American blocs decided, after ten years, and with the impulse given by Venezuela, to sum all of their strengths to achieve their so much longed economic development and thus become competitive to the level of giants like the European Union and the United States.

The Common Market of the South (Mercosur), which includes the two powers in the region (Brazil as a member, and Chile as an associate), besides Argentina, Uruguay, and Paraguay, came to terms on the Free Trade Agreement with the Andean Community of Nations (Bolivia, Venezuela, Perú, Colombia and Ecuador), in order to upgrade this market of over 350 million people.

This agreement, which includes countries with an altogether Gross Domestic Product over 800 billion U$, is to be made effective in each of the subscribing countries within a 60 day term.

Trade between Mercosur and the Andean Community of Nations (CAN) will grow from 30 billion U$ to 50 billion U$ by 2008, thanks to the Free Trade Agreement between both blocs. The agreement between Mercosur and the CAN, subscribed last December, will make trade between both blocs free within ten years. South America has a population of 361 million, a GDP of 974 billion U$ (for 2003) in an area of 17,658 km2, and a per capita income of 2696 U$.


Enrique Martínez, an economist and a professor at Lisandro Alvarado University, thinks that in order to compete with other blocs, the competing countries should not bear alarming rates of inflation, debt, or unemployment. “They must be converging nominal economies. Integration seems very good to me, since there is economic integration in Latin America. Such integration can not be achieved through the FTAA, since it would be a matter of competing against a country with a much more advanced technology.”

“Venezuela could be the most favored nation by this agreement, since it has oil incomes the other countries do not have.” He explained that this would take place only if “it seeks to complement what it does not produce and manages its internal economy in terms of integration”.

For his part, the national director of Entrepreneurs for Venezuela, Pablo Ibarra noted: “I think it’s the best measure that has been taken. I have already seen production in the alliance with the results of the Major International Business Rounds.” According to Ibarra, entrepreneurial and endogenous development (development from within the country) has improved with the exchange of products and ideas. He said that Venezuela is capable of supplying wood, textiles, shoes, metallurgical products, plastics, cacao, porcelain, and fruit.

China will open its doors for Latin America.

China is willing to open its market of 1.3 billion people for Latin America, said Li Ruogu, president of the Central Bank of China, in a businessmen’s meeting in northern Perú.

Chile, Perú, and now Colombia, Ecuador, and Venezuela, have repeatedly shown interest in starting discussions for a free trade agreement with China, whose demand for products in the last few years has given an impulse to growth among countries in the region. “We think that in the future, China, as well as Latin America, and particularly Perú, will have much potential to develop their commercial region for the benefit of both parts.”, said Li Ruogu during an annual entrepreneurial meeting in northern Perú.

The Chinese official affirmed that trade between China and Latin America “is growing at a very fast rate”, an example of this is Perú, whose exports to this Asian nation, which increased 14% in 2002, have leaped to 82% so far this year . “China is an enormous market in which other countries can participate”, he added.

Colombian president, Alvaro Uribe said on his recent visit to Lima, that the CAN countries want his Peruvian colleague, Alejandro Toledo, current president of the organization, to present a request before China in order to seek a free trade agreement. “We must look for opportunities for our workers and for our businessmen. We don’t have ideological borders. We want to negotiate with our brothers of South America, with the United States, Canada, Central America, and also with China,”, said Uribe in Lima.

Published in Quantum N.38