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Date: Fri, 13 Dec 96 11:59:25 CST
Subject: NAFTA & Inter-Am Trade Monitor
Article: 2290

From: (Dale Wiehoff)

Mercosur fights back

NAFTA & Inter-Am Trade Monitor, 13 December 1996

After the October leak of a World Bank report criticizing the Mercosur trade pact (which now includes Argentina, Brazil, Paraguay and Uruguay, with Chile and Bolivia joining soon), Mercosur and its supporters are fighting back. Critics claimed that intra-Mercosur trade grew, but that much came in sectors in which Mercosur members are not internationally competitive. They said that the internal free market turns Mercosur into a "fortress" that deters members from investing in their most efficient, and internationally competitive, industries.

According to Robert Devlin, chief of the integration, trade and hemispheric issues division of the Inter-American Development Bank, critics overlooked the overall growth of Mercosur imports. Devlin notes that "only 15 percent of all products turn out to have shifted significantly to the Mercosur market, while 27 percent shifted to non-Mercosur markets."

World Bank officials have also distanced themselves from the report, though perhaps not from its conclusions. According to the report, intra-Mercosur trade rose to $12.3 billion in 1994 from $4.2 billion in 1990. Shahid Javed Burki, the World Bank's vice president for Latin America and the Caribbean, praised Mercosur, but agreed with the report that "some of the growth stimulated by intra-Mercosur trade has not been efficient."

Robert Devlin, "Hardly a Fortress," JOURNAL OF COMMERCE, November 26, 1996; Abid Aslam, "Brazil, World Bank Seen Resorting to Archaic 'Information Control.'" INTERPRESS SERVICE, November 26, 1996; Abid Aslam, "Mercosur Draws Fire From World Bank Economist," INTERPRESS SERVICE, October 23, 1996.