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Is Pink Latin America embracing free trade? | The World Weekly

When Venezuela entered Mercosur (the Southern Common Market) in 2012, President Hugo Chávez described it as a Latin American “accelerator" that he was pushing to the floor with Dilma Rousseff and Cristina Kirchner, his Brazilian and Argentine counterparts, respectively. His speech positioned South America’s largest economic bloc - which also includes Uruguay, Paraguay and Bolivia - against the US’ free-trading zeal. Instead, he said, the bloc would advance the Bolivarian socialist revolution. 

Last December, however, Brazil and Argentina agreed to suspend Venezuela from the bloc for failing to meet the membership requirements. Mercosur’s new leaders hold a different vision.

In Argentina, leftist Kirchnerism (2003-2015) was defeated in the polls by the centre-right political party of Mauricio Macri in 2015. Meanwhile, the impeachment of Ms. Rousseff in Brazil allowed Michel Temer to assume the presidency last August and start shifting policies to the right.

They may disagree over tango and samba, but these two conservative politicians are in tune when it comes to trade and Mercosur. This week they agreed to remove all economic barriers within the bloc and to search for new partnerships abroad.

“In the face of the doubts rising around the world, what is clear is that we have to be allies in this 21st century,” Mr. Macri said during a state visit in Brasilia on Tuesday. "Given the tendency towards disunity, isolationism and protectionism, Brazil and Argentina respond with more rapprochement, dialogue and trade," Mr. Temer agreed.

Ironically, in their plan to rewrite the history of Mercosur they have found a point of convergence with their pinkish predecessors: opposition to the US.

The presidents of Mercosur countries in 2012. None of them is still in office

Trump: In crisis, opportunity

Just three weeks into his presidency, Donald Trump has already put his combative campaign rhetoric into action, walking away from the Trans-Pacific Partnership, promising to do the same with NAFTA (a North American trade deal), scrapping with China on Twitter and accusing Germany of being a currency manipulator.

Relations with Mexico are particularly strained, since Mr. Trump has repeatedly threatened to build a border wall financed by the Mexican government or, if it does not play ball, by a 20% tax on Mexican imports. Mr. Macri, who holds the temporary presidency of Mercosur, sees in this obstinacy an invitation for Mexican President Enrique Peña Nieto to look to the south. 

Inadvertently, while putting America First, President Trump might aid deeper trade integration south of the border. Due to the political climate in the US, “we might see renewed efforts towards the intensification of negotiations of Mercosur with Mexico, the other Pacific Alliance countries and eventually some Central American neighbours”, Renato Baumann, a Brazilian economist, told The World Weekly.

Mexico is a member of the Pacific Alliance, Latin America’s other trade bloc, together with Chile, Colombia and Peru. This group shares a rich trading history, but its members now exchange more with countries from outside the region, such as the US, China and the EU, than between themselves. Mercosur has tried to woo Beijing for several years, and an agreement with the Pacific Alliance could expedite this.

The Pacific Alliance and Mercosur account for more than 80% of Latin America’s foreign trade, according to the Economic Commission for Latin America and the Caribbean.

Mercosur has also been trying to secure a trade deal with Brussels since 1999. But many EU countries, led by France, feel threatened by the potential impact of South America’s agriculture competing with their domestic farmers. In this case too, Mr. Trump could involuntarily bring positions closer together.

"We, as the EU, if we perhaps don't advance or advance more slowly with a view to the US... will continue to negotiate other trade agreements quickly," German Chancellor Angela Merkel said this week after meeting her Uruguayan counterpart, Tabaré Vazquez, in Berlin. "We do not agree with making walls. We want to build bridges between nations,” Mr. Vázquez replied, extending a hand on behalf of Mercosur.

German Chancellor Angela Merkel and Uruguayan President Tabaré Vázquez shake hands at a press conference on February 8

 America’s other walls

It is too soon to know if Brazil and Argentina’s willingness to trade will result in new Mercosur partnerships. “The economic agenda of the bloc has not advanced in recent times,” Lucas Arce, a researcher from Paraguay, told TWW. “Due to its history of ups and downs in trade relations, we must be cautious.”

We are united by a resentment to an inevitable trade relationship that we need as bread because it is oxygen, but can also kill us.” - José Mujica, former Uruguayan president, speaking at Mercosur in 2014

One obstacle is a recent spat between Argentina and Bolivia sparked by Mr. Macri’s decision to tighten the border against “criminals”. In a country with a rich history of immigration, many have criticised this “Argentines first” policy and compared it to Mr. Trump’s ‘Muslim ban’.

“Brothers, Latin American presidents, we can’t follow the immigration policies of the North,” declared President Evo Morales of Bolivia, also a member of Mercosur. The country’s embassy reckons 800,000 Bolivians currently live in Argentina.

While Mr. Temer and Mr. Macri aspire to remove all trade borders, a right-wing Argentine congressman, Alfredo Olmedo, is calling for a wall to be built along the Bolivian frontier. 

Nowadays, it is still difficult to picture Latin America as Mr. Chávez used to describe it: “a single homeland”.

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