MERCOSUR and Negotiations for Free Trade in the Americas

The 34 countries in the Americas have agreed to create a Western Hemisphere or Americas free trade area(FTAA) by 2005. Negotiations for this have begun in June 1995 and seven working groups were established, and four more will operate from March 1996. Given the independent sub-regional economic integrations, represented by the North American Free Trade Agreement(NAFTA), the Southern Cone Common Market(MERCOSUR), the Andean Group, the Caribbean Common Market, and the Central American Common Market, the continent-wide FTAA negotiations will be very difficult to proceed. Especially, the custom union MERCOSUR, which is the most integrated sub-regional group, has its own scheme to integrate the South American market while the United States, the largest and the most influential economy, hopes to take NAFTA as the expanding core for a FTAA. At present, MERCOSUR's utmost concerns are with enhancing intraregional trade and upgrading its negotiation leverage vis-á-vis the United States and the European Union. Thus, MERCOSUR factor in FTAA negotiations is not so much positive, but there needs to take into account the inter-American political interactions among Brazil and the United States, Brazil and Argentina, and MERCOSUR, Andean Group, and Chile, and finally MERCOSUR and European Union to tell the outcomes of the negotiations. For the time being, FTAA negotiations will go without active engagements by the United States because of its Administration-Congress politics, and by Brazil because of its strategy to build a South American free trade area under her hegemony