Mercosur: Brazilian industry after review of Venezuela’s entry

Several Brazilian industry organizations are strongly lobbying Congress and President Lula da Silva to stop the incorporation of Venezuela to Mercosur, on the terms originally agreed, according to Valor, a publication which usually reflects the interests of the industrial sector.

Brazilian industrialists fear that Venezuela’s incorporation will have a negative effect on Mercosur’s negotiations with other markets such as the European Union, because of the political positions of Venezuelan president Hugo Chavez. They also have doubts about the benefits of access to the Venezuelan market since the tariffs’ reduction timetable still has to be negotiated.

The incorporation of Venezuela has already been agreed by Mercosur full members but still must be ratified by the Congress of Brazil and Paraguay.

Among the dissenting organizations is Brazil’s powerful National Industry Confederation, CNI, which has sent letters to all members of the Foreign Affairs Committee from the Brazilian Senate and to Foreign Affairs and Trade, Industry and Development ministers, Celso Amorim and Miguel Jorge, respectively.

“We’re not contradicting the government’s political stance, but rather attempting to explain that to join Mercosur, countries must at least comply with certain stages”, said Soraya Rosar, head of CNI International Negotiations Office to Valor.

CNI which admits that exports to Venezuela have significantly increased is concerned with the speed with which Brazil will have to open its market to Venezuela.

“Venezuela is an important market for textiles but it should not cause difficulties for the opening to other more large markets”, said Fernando Pimentel, CEO of the Brazilian Textile Industry Association, who admitted that the incorporation of Venezuela could create difficulties to other Mercosur trade discussions.

Venezuela’s incorporation also faces stiff resistance in the Brazilian Congress following President Chavez attacks on Senators which he labeled “US parrots” and oligarchs.

Brazilian exports to Venezuela in the first five months of this year jumped 31% over a year ago and totaled 3.6 billion in 2006, up 60% over 2005.
Another organization which addressed letters to Congress members is the Brazilian Electric and Electronics Association, ABEE, which suggested that Foreign Secretary Amorim should be summoned by Congress to explain the “fast and incomplete” incorporation of Venezuela to Mercosur.

According to the letter, Brazilian Congress members “will surely defend national interests and reject Venezuela’s incorporation to Mercosur in the current negotiated terms”.
“I totally support Venezuela’s Mercosur membership but it’s absurd that we should pay the price of incorporation without a matching advantage or benefit”, said Humberto Barbat, president of ABEE.