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Cablegate: Upcoming Mercosur Summit Unlikely to Score Much Progress

VZCZCXYZ0000
RR RUEHWEB

DE RUEHMN #0700/01 3381521
ZNR UUUUU ZZH
R 041520Z DEC 09
FM AMEMBASSY MONTEVIDEO
TO RUEHC/SECSTATE WASHDC 0066
INFO MERCOSUR COLLECTIVE
RUEHTG/AMEMBASSY TEGUCIGALPA 0001

UNCLAS MONTEVIDEO 000700

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECIN ECON ETRD BR AR PA UY
SUBJECT: UPCOMING MERCOSUR SUMMIT UNLIKELY TO SCORE MUCH PROGRESS

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SUMMARY

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1. (SBU) SUMMARY: On December 8, Montevideo will host Mercosur's
38th Presidential Summit. The GOU's main targets at the beginning
of its pro-tempore presidency were on the commercial, external
relations and institutional fronts. Achievements seem to have
fallen short on every front and no major outcome is expected from
the upcoming Summit. Key long-term GOU priorities, elimination of
the double imposition of the bloc's common external tariff and
agreement on a Customs Code, do not appear to have advanced
appreciably. In the absence of concrete progress on economic and
commercial areas, comments on regional politics (especially
Honduras) and the initial meeting between Uruguayan President-Elect
Mujica and Brazilian President Lula da Silva will be closely
watched. END SUMMARY

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MERCOSUR'S 38TH SUMMIT

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2. (U) On December 8, Montevideo will host the 38th Presidential
Summit of Mercosur; the Southern Cone Common Market composed of
Argentina, Brazil, Paraguay and Uruguay that has Chile and Bolivia
as associate members, and to which Venezuela is in process of
adhering. The presidents of Argentina, Brazil and Paraguay will
attend the Summit. Canadian Deputy Minister of Foreign Affairs
Leonard Edwards is invited as an observer as will Colombian Vice
President Santos. It is still unclear if Hugo Chavez will attend.
The Summit will be preceded by a Common Market Council ministerial
and a meeting of Ministers of Economy and Central Bank Presidents,
both of which will take place on December 7.

3. (SBU) Upon taking on the bloc's pro-tempore presidency in July
2009, the GOU defined a Mercosur agenda for the second half of the
year that aimed to make concrete progress on three areas:
commercial issues, external relations and institutional aspects,
many of which Embassy contacts had acknowledged in July would be
difficult to achieve.

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ECONOMIC AND COMMERCIAL GOALS

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4. (U) On the economic and commercial front the GOU sought to
improve the bloc's Customs Union by adopting a program to eliminate
the double imposition of the bloc's Common External Tariff. MFA
contacts admitted in July this was highly unlikely to be achieved
during Uruguay's presidency, but remained a key long-term goal of
the GOU.

5. (U) The GOU also looked to reducing asymmetries between large
and small partners through harmonizing competitiveness-distorting
public policies, eliminating current non-tariff barriers (NTBs),
and adopting mechanisms to deal with new NTBs. The GOU proposed
projects to improve the coordination of fiscal and macroeconomic
policies among members, and define a list of strategic projects in
the areas of energy, productive integration and development of
regional public goods. Mercosur officials told Emboffs that no
substantial progress has been made in these areas.

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EXTERNAL RELATIONS

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6. (U) The GOU sought to "create conditions" for a resumption of
trade negotiations with the European Union, signing an agreement
with the Gulf Cooperation Council and to resume negotiations with
the Central American Integration System. Mercosur and the EU met
on November 24 (for the first time since 2006) to begin to revive
stalled negotiations. They announced another meeting for the first
half of 2010 when Spain and Argentina will hold the EU's and
Mercosur's presidencies, respectively. Mercosur also met with
Egypt (for the first time since Egypt invited Mercosur to negotiate
a fixed-preferences agreement in 2004), and with South Korea (for
the third time since 2005 when they initiated a joint study on the
possibility of negotiating a free trade agreement), but no
substantial progress was reported.

7. (U) In support of its longstanding objective to conduct trade
negotiations independently from the bloc, the GOU had stated that
"in order to achieve such goals, without affecting the commercial
interest of any partner and allowing all partners to benefit from
open regionalism" Mercosur would "study the possibility of enabling
mechanisms that respect the economic and institutional realities of
each partner". In practice, the GOU did not push this agenda
during the semester as it did not undertake any relevant trade
negotiation independently from its Mercosur partners.

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INSTITUTIONAL PRIORITIES

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8. (U) On the institutional front the GOU had two main goals. It
sought to analyze Mercosur's institutional structure and propose
rightsizing measures to adapt key institutions to ever-increasing
tasks. Secondly it planned to examine the strict compliance of
partners with MERCOSUR's legislation and the strengthening of
mechanisms such as dispute settlement and effective compliance of
arbitral decisions.

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COMMENT: LITTLE PROGRESS, BUT POLITICAL POSTURING IS LIKELY

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9. (SBU) COMMENT: In the absence of concrete advancement on the
economic agenda, Mercosur leaders often revert to political
statements and resolutions. The situation in Honduras will no
doubt come up and there may be some positioning on the Colombia
Defense Cooperation with the U.S. Post will also be watching the
anticipated meetings between President-Elect Jose "Pepe" Mujica and
the Mercosur leaders, expected on the margins of the summit.
MATTHEWMAN

© Scoop Media

 
 
 
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