Cuba's bid to join trade block may stall the FTAA

Campaign News | Saturday, 5 March 2005

US is sure to object to Cuba joining Mercosur

Just as Brazil and the United States were trying to revive stalled negotiations for the Free Trade Area of the Americas (FTAA), a stumbling block has emerged for the formation of the world's biggest free trade area: Cuba has asked to become an associate member of the US$727 billion Mercosur trade bloc.

Mercosur's full-fledged members - Brazil, Argentina, Uruguay and Paraguay - must decide by consensus whether Cuba can join, new Uruguayan President Tabare Vazquez told reporters in Montevideo on Thursday, after Cuba's Foreign Minister Perez Roque used Vazquez's swearing-in celebration as a stage for the Cuban request.

As Mercosur considers closer ties with Cuba, Brazil's powerful chief of staff, Jose Dirceu, met with U.S. Secretary of State Condoleezza Rice in Washington on Thursday to try to resolve contentious issues to restart negotiations for the 34-nation FTAA.

The free-trade area would comprise all countries in the Americas with the exception of Cuba, which Rice has called one of the world's "outposts of tyranny."

The co-chairs of the FTAA talks, Brazil and the United States, are moving closer to accepting different speeds of integration that would allow them to exclude contentious areas - such as intellectual property rights and U.S. agricultural subsidies - from a possible trade deal. But experts say the Cuba desire to join Mercosur could be a thorny sideshow.

"This could cause complications with the United States, and for the FTAA talks," said Alexandre Barros, a political risk analyst at Early Warning in Brasilia, Brazil's capital. "Brazil for a long time has been careful in widening its influence to the north, as the Caribbean was considered the United States' back yard. But under President (Luiz Inacio) Lula (da Silva), currents in the Foreign Ministry that think Brazil should assume a leadership role in Latin America have been talking louder."

Since taking office in January 2003, Silva has said he favors closer trade links with other Latin American countries over deals with the United States or the European Union, Brazil's biggest trading partners.

And just like Argentine President Nestor Kirchner, Silva has been using a left-leaning rhetoric opposing the U.S. trade embargo against Cuba while favored increasing trade ties with the communist island.

Other top Brazilian government members sympathize with Fidel Castro, the Cuban leader. During Brazil's military dictatorship in the 1970s, Dirceu temporarily fled to Cuba and underwent plastic surgery to avoid being recognized in Brazil, where he was wanted as a leftist student leader.

Cuba's trade with Brazil and Mercosur is still small, but has doubled since Silva was elected and may increase more in the petroleum sector.

Brazilian state-run oil firm Petroleo Brasileiro SA and Venezuela's state-oil company Petroleos de Venezuela SA this year plan to start building a US$20 million (euro15 million) lubricants factory in Cuba. Petrobras is also interested in exploring deep-water oil blocks off the coast of Cuba, which has small, but rising oil production.

The linkup with Venezuela is likely to further irritate the U.S. government.

While the showcased close friendship between Venezuela's President Hugo Chavez and Castro may not result in much more than Venezuela providing Cuba with cheap oil exports, Venezuela's aspiration to upgrade from associate to full Mercosur membership could bring Cuba even closer to Mercosur.

Experts said the issue of a possible Cuban associate membership in Mercosur just as FTAA talks are about to gain a new life may be no coincidence.

"This could be another bargaining chip by Mercosur to gain concessions from the United States in the FTAA talks," says David Fleischer, a political analyst at the University of Brasilia. "It increases the pressure on the United States."

Mercosur already has Bolivia, Chile, Peru, Ecuador, Colombia and Venezuela as associate members.

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