Currently a custom union, Mercosul should become a project for regional development, says Samuel Pinheiro Guimarães, secretary-general of the Ministry of International Relations. With Mercosur’s Summit expected to take place in Cordoba this week, Guimarães believes the economic bloc will be strengthened by Venezuela’s adhesion. He is not worried about criticisms on the fact that such adhesion could increase Venezuelan president Hugo Chávez regional leadership. Ambassador Guimarães says "Brazil is not concerned of leadership". This is the interview:

Agência Senado - Venezuela’s adhesion to Mercosur has polarized debates on the economic bloc's future. In your opinion, will it make the bloc stronger?

Samuel - Mercosur will be strengthened. Venezuela is a country with outstanding  natural resources and its market has got great potential. It will have resources to make substantial investments in the region, a bit due to oil price high. Venezuela has overcome Saudi Arabia when it comes to oil reserves, and it has got great natural gas reserves, which are among the
largest in the world. At least two of Mercosul members, as well as Chile, which is associated to the bloc, have problems in energy field. Thus, importing gas from Venezuela is important even to economic growth rates.

Agência Senado - Opposition has pointed out the political risk of it increasing regional leadership of Hugo Chavez. How do you see that?

Samuel - Brazil is not concerned of leadership, and it is not a candidate for South America leader. Many people who used to criticize Brazil for trying to be a leader now are concerned of Brazil losing its leadership. I do not understand it. Any country is entitled to practice foreign policy, there are no spheres of influence in South America. Brazil does not aim at leadership nor at any kind of hegemony. President Lula’s policy has been characterized by a partnership policy, between equal partners.

Agência Senado - What do you think of concerns that Venezuela’s adhesion could make it more difficult to negotiate a free trade agreement with the European Union (EU) and a deal to implement the Free Trade Area of the Americas (FTAA)?

Samuel - Mercosur presented a “four plus one” proposal to the United States a long time ago and no answer has been given yet. Negotiations with the EU are very advanced, so there is no reason for alarm. Venezuela’s main customer is the United States. The main source of imported products is the United States. Venezuela’s president has been through many electoral disputes and there were no claims that elections were not fair. Opposition has made a coup d’état against Chavez. There are no records of journalists being arrested. There are no records of foreign companies being expropriated. The Mercosul democratic clause has been accepted by Venezuela.

Agência Senado - Colombia, Peru and Chile have signed free trade agreements with the United States. Is it a sort of FTAA without Brazil?

Samuel - The United States signed free trade agreements with Central America, Colombia and Peru, not yet with Ecuador. Of course these countries have the right of signing free trade agreements with any other country, as Chile has signed with The United States. From an objective point of view, our trade with Chile has increased. The products we export to the United States are rather different from those exported by Peru, Colombia and Chile. There is no competition among them in the American market. In these countries’ markets, American products may compete with ours, but we have signed free trade treaties with these countries and we will be in equal conditions with the United States in such markets.

Agência Senado - Members of Mercosul as Uruguay and Paraguay consider signing treaties with the United States. Dou you think they may ask Mercosul permission for that?

Samuel - There is no record of these countries asking for permission, though there have been some unofficial rumors in the press. These countries have the right of negotiating any international treaty. In custom union members have the same import tax. If any Mercosul member negotiates a treaty with another country, common tax set for this country will not be respected. Thus, in a way this country will be leaving the custom union. I don’t believe this might be in the best interest of any of the members of Mercosul.

Agência Senado - What do you think of Paraguay and Uruguay’s claims over the so called “asymmetries” in Mercosul?

Samuel – The assimetries are quite obvious. We’re already making a special fund (Structural Convergence Fund), which is to be voted in the Congress, with most of the investments being made in Paraguay and Uruguay. Therefore, these investments are a kind of compensation for the asymmetries. Studies on the viability of a second bridge to link Brazil to Paraguay are just being finished. Another goal is solving access problems at Paraguay’s side of the bridge. Itaipu has just installed two new turbines, which will increase Paraguay’s revenue.

Agência Senado - Another issue of Mercosul is the dispute over the installation of two paper mills in Uruguay, which is contested by Argentina. Could such issues affect the integration process?

Samuel -Each country’s political and economic situation affects the custom union. If there are issues between two countries, they may affect the union as a whole. It’s something natural, on political and economic process, though. The fact that they have taken it to court indicates they’re going to accept court’s decision.

Agência Senado - What are Brazil’s goals now it is assuming pro tempore chairmanship of Mercosul ?

Samuel - Along with other members, Brazil aims to contribute to Mercosul improvement in all sectors. Brazil intends to stimulate foreign trade with the EU, the United States, Canada, Southern African Development Community, countries from the Gulf and Israel. We intend to finish negotiations with the EU this semester. To combat asymmetries, Brazil aims to approve the Structural Convergence Fund and make it sure it starts working. There is an understanding with the National Brazilian Development Bank in order to invest in infrastructure projects. Not only projects in the border, but also inside the countries. There is also an effort of South American countries for energy integration, which could increase efficiency in 30%.

Agência Senado - What is your opinion about critic’s prediction  Mercosul could come to an end ?

Samuel - Why would it? If we think of it, on  the first semester of 2005,the sum regarding Brazil trade with Mercosul was US$ 8,5 billion, and in 2006 it was US$ 10,1 billion. Many countries want to sign trade agreements with Mercosul. Why is that? Mercosul is not becoming extinct, yet it is expanding.

Agência Senado -  What do you think of  the creation of Mercosur Parliament?

Samuel - Nowadays the issue is the need for changing Mercosul, from a custom union into a project for regional development. Since trade between the countries is free, there must be a project for regional development. In the future, law harmonization may be necessary. Until now, there has been harmony in trade law, with no tax for imports. Yet, there are also laws regarding credit and tax, which affect companies.