Chile's Membership in Mercosur Postponed Indefinitely

 
The government of President Ricardo Lagos recently gave further indication of its lack of commitment to joining Mercosur. As reported earlier on AmericasNet, Chile is hoping for a special relationship with the US, either through NAFTA or bilaterally. The new government had appeared frustrated by the Clinton administration's lack of interest in pursuing these objectives, making the best option look like strengthening Chile's subregional position. The Chilean economy was showing signs of weakening, and trade with neighboring countries seemed to be the best course to pursue. In practice, however, intraregional trade has been plagued with difficulties. At the Ibero-American Summit in Panama in mid-November, Lagos and his Mercosur counterparts agreed to delay the date for Chile's full membership, originally set for the end of 2001.

Most of the intraregional problems have been caused by Argentina. The De la Rua government is concerned about the infrastructure expenditures that the transit of goods across its territory creates without adequate compensation, including wear and tear on roads and other infrastructure. As a stopgap measure, Argentina wants to increase the charges it levies on trucks that use its highways to carry goods to third countries. In the long term, however, the region must follow through with proposals for greater integration of transport systems, a goal set at this summer's Summit of South American Presidents. Money for this type of long-term and expensive investment is scarce. Argentina has little public funding for this type of expansion, much less for conservation of road and railroad systems. Transportation is one of the main bottlenecks for any ambitious expansion of intraregional trade between Chile and Mercosur.

Chile is also finding Argentina to be a difficult trading "partner." Argentina just presented its first two complaints to the WTO, and both are against Chile. The charges involve the sensitive agricultural area, including supposed barriers to Argentine exports of vegetable oils, wheat, milk and flour.

Also problematic is the fact that Chile has considerably lower external tariffs than does Mercosur, which is considering increasing certain tariffs in retaliation for what it considers barriers in first world nations. In addition, Chile's privileged position on the Pacific Ocean has been challenged by the demands of its Mercosur partners that it refrain from negotiating separate trade relations with its ASEAN partners. This appears to have been the last straw for President Lagos.

No new date has so far been suggested for Chile's integration into Mercosur. José Botafogo Gonçalves, Brazil's Special Representative to Mercosur, argued that "elements are missing; if we set a date now it would end up being false. Let's see what happens in world trade policy." The elements in question include the new US president's policies toward Latin America, not least of which will be the importance accorded to the FTAA. Still, Lagos will be present at the upcoming meeting of the presidents of Mercosur in Florianópolis, Brazil on December 14-15. He was supposed to sign a protocol to set the calendar for Chile's membership in Mercosur, but the wording will have to be a bit more general now. In the meantime, Chile waits and dreams for an opening in NAFTA.