Identifier
Created
Classification
Origin
09ASUNCION474
2009-07-28 17:38:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Asuncion
Cable title:  

REGIONAL ISSUES AND COMPLAINTS MARK MERCOSUR SUMMIT

Tags:  ECON PREL PGOV PA 
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VZCZCXYZ0006
OO RUEHWEB

DE RUEHAC #0474 2091738
ZNR UUUUU ZZH
O 281738Z JUL 09
FM AMEMBASSY ASUNCION
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8016
INFO RUCNMER/MERCOSUR COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
UNCLAS ASUNCION 000474 

SIPDIS
SENSITIVE

WHA/FO CMCMULLEN, WHA/BSC MDRUCKER, BFRIEDMAN, MDASCHBACH

E.O. 12958: N/A
TAGS: ECON PREL PGOV PA
SUBJECT: REGIONAL ISSUES AND COMPLAINTS MARK MERCOSUR SUMMIT

UNCLAS ASUNCION 000474

SIPDIS
SENSITIVE

WHA/FO CMCMULLEN, WHA/BSC MDRUCKER, BFRIEDMAN, MDASCHBACH

E.O. 12958: N/A
TAGS: ECON PREL PGOV PA
SUBJECT: REGIONAL ISSUES AND COMPLAINTS MARK MERCOSUR SUMMIT


1. (U) Paraguay hosted the MERCOSUR Summit July 24-25 in
Asuncion with the presidents of Argentina, Brazil, Uruguay,
Chile, and Bolivia attending, as well as representatives from
Ecuador, Venezuela, Peru and Colombia. (NOTE: Venezuelan
President Hugo Chavez declined to attend the Summit at the
last minute, citing security concerns and a busy agenda with
the ongoing developments in Honduras. Paraguay's press,
however, reported that Chavez allegedly was annoyed with
MERCOSUR members because they refused his request to have
Honduras' deposed President Manuel Zelaya at the Summit. END
NOTE.)


2. (U) President Lugo opened the Summit by listing Paraguay's
achievements in its pro-tempore presidency of MERCOSUR,
including commercial relationships established with South
Africa, South Korea, Japan, Cuba, Chile, Colombia and the
E.U. The general tone of the Summit, however, was marked by
criticisms and complaints from Uruguay and Paraguay about
Brazilian and Argentine protectionist measures. On July 24,
Paraguay's Foreign Minister Hector Lacognata characterized
Argentina's and Brazil's response to the ongoing financial
crisis as "unilateral protectionist measures without regional
coordination." Paraguay's largest industrial chambers
protested outside the Summit demanding that Paraguay make an
official complaint about the recurrent trade barriers and
market access limitations imposed by Argentina and Brazil.
Paraguay lodged an official complaint at the Summit.


3. (U) MERCOSUR members (Paraguay, Uruguay, Brazil, and
Argentina) were unable to reach an agreement about the
elimination of the double Common External Tariff (CET),and
were unable to agree on a common customs code. (NOTE: Both
items were scheduled for completion in late 2008 under
Brazil's pro-tempore presidency. END NOTE.) Participants
discussed the use of local currencies for commercial and
trade transactions instead of the U.S. dollar, but no
agreement was reached. Uruguay, which assumed MERCOSUR's
pro-tempore presidency for the next six months, opposed
Paraguay's proposal to create a MERCOSUR Justice Court on the
grounds that it violates Uruguay's constitution. Argentina's
President Cristina Fernandez demanded that member countries
work to "break the influenza vaccine patent monopoly."
Regarding Venezuela's inclusion as a full-fledged member in
MERCOSUR, Uruguay and Paraguay both stated that Venezuela
could provide a "new favorable balance of relationships and
integration." (NOTE: Paraguay's Congress has not approved
Venezuela's membership in MERCOSUR and the issue remains
highly controversial. END NOTE.). The starting date for the
Bank of the South was officially announced for January 2010;
the bank will begin operations through its headquarters in
Caracas. Participants also issued a joint statement demanding
the immediate restoration of public order and democracy in
Honduras.


4. (SBU) COMMENT: The 37th MERCOSUR Summit was dominated by
rhetoric about economic integration, with little concrete
measures to address trade and commercial issues that divide
the bloc. As expected, protectionist measures from Brazil and
Argentina took center stage, pitting the smaller countries
against the larger two. Though accompanied by high initial
expectations, Paraguay ended its six-month pro-tempore
presidency of MERCOSUR without any meaningful
accomplishments. Nor does it not come as a surprise that
after 15 years Paraguay continues to feel that MERCOSUR has
failed to advance its main objective of regional economic
integration. END COMMENT.
Shaker