Mercosur - Changing Course?

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Case Details:

Case Code : BENV002
Case Length : 19 Pages
Period : 1991-2005
Pub Date : 2006
Teaching Note : Not Available
Organization : -
Industry : -
Countries : Latin America

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Earlier, Mercosur had suspended trade negotiations with the US, citing its reluctance to lift agricultural subsidies.

The Uruguayan Foreign Minister Reinaldo Gargano⁷ later denied his country's interest in separate trade talks with the US, but his hint succeeded in alarming Argentina and Brazil.

The presidents of these countries both realized it was time to address the concerns of the other two small members. Argentine President Nestor Kirchner said, "The benefits cannot go only one way. Mercosur must also be bloc of mutual assistance for balanced development."⁸

In a similar vein, his Brazilian counterpart Luiz Inácio Lula da Silva agreed that Brazil and Argentina must shoulder their responsibility in the process of regional integration and "be generous with our small brothers."⁹

However, neither of the leaders spelt out any concrete measures in this regard.

Like Uruguay, Paraguay's President Nicanor Duarte Frutos too expressed some unhappiness with Mercosur, saying, "Paraguay is fully committed to continue being a Mercosur member.

That does not mean that we are happy with the way Mercosur is working."¹⁰ It was clear that there was dissatisfaction on the ground, leading analysts to wonder whether the member states would be able to reconcile their national interests with efforts to deepen regional free trade.

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7] In 2006, Uruguay was ruled by a coalition dominated by leftist parties. The Economy and Foreign Ministers had divergent perspectives with regard to trade talks with the US.

8] "Mercosur 2 to give smaller fry a break," http://www.falkland-malvinas.com/Detalle.asp?NUM=7076.

9] "Mercosur 2 to give smaller fry a break," http://www.falkland-malvinas.com/Detalle.asp?NUM=7076.

10] Andres Oppenheimer, "Uruguay's overture to U.S. shakes up bloc," http://www.miami.com/mld/miamiherald/ news/columnists/andres_oppenheimer/13658573.htm.