The summit itself, the first for Argentina's President Néstor Kirchner and Brazil's Lula da Silva, was uncharacteristically productive. Kirchner wasted no time in making his mark, proposing the broadening of Mercosur to include Venezuela and the other members of the Andean Community (CAN). Venezuela's President Hugo Chávez , who has consistently espoused support for integration with Mercosur, was present as a guest. To underscore the two blocs' commitment to closer ties, Lula made a guest appearance, for the first time, at last week's CAN summit in Colombia.
The heads of government also expressed commitment to deepening the current toothless customs union and implementing a fully fledged common market by 2006, including a common parliament. Kirchner said that Mercosur must come first and only then would they look at 'the international perspectives that are opened,' such as the Free Trade Area of the Americas (FTAA) and an FTA with the EU.
Things are looking up on this front too in the form of the EU's 'historic' announcement that it will reform what is regarded by Mercosur members as its egregious Common Agricultural Policy (CAP). Mercosur has consistently argued that the EU must slash the amount of aid it gives to farmers as a prerequisite for any trade deal. While the EU has failed to definitively break the link between subsidies and production, which Mercosur contends encourages farmers to produce more so they can get a bigger subsidy, it did enough to elicit an outraged response from Copa, the biggest farmer's federation in the EU. Copa said the reforms undermined the CAP and 'endangered the future of European agriculture'. It warned of 'uncertainty and distortions'.
Mercosur and EU trade negotiators met in Paraguay last week to discuss the progress of the FTA. Mercosur representatives said it remained to be seen exactly what is being offered to the bloc's producers but they emphasised the 'enormous importance' of the reforms.
EU trade commissioner Pascal Lamy hailed the reforms as giving him 'credit' before the next WTO conference in Cancún, Mexico. The US, a strident critic of the CAP, will now face pressure to scale back its own controversial farm subsidies before the next round gets underway.
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