Mercosur Musical Chairs: Paraguay Out, Venezuela In (and it makes zero difference…)

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Well, that didn’t take long: in the wake of Fernando Lugo’s quickie impeachment, Mercosur has suspended Paraguay’s membership in the trade block…which, magically, removed the one big obstacle remaining to Venezuela’s accession, allowing Venezuela to become a full member.

Politically, it’s a rich prize: signing onto a customs union with Chávez’s Southern Cone ideological fellow-travellers is a longstanding strategic aspiration for the Bolivarian regime.

But Mercosur is supposed to be, first and foremost, a trade agreement, so…what does it mean for Venezuela’s economy?

Well, it’s a funny thing. Normally, countries try to negotiate free trade agreements for one reason: to get better access to foreign markets for their exporters. But Venezuela’s a mono-exporter of a product that doesn’t face any trade barriers anywhere, because everybody’s desperate for it.

In the meantime, our non-oil export sector has been utterly defeated by the insane mountain of paperwork aspiring exporters face, and finished off by a crazy Currency Control regime that more or less guarantees exporters lose money. Under those circumstances, tariffs levels in Argentina and Brazil are number 7,398,328 or so on the list of practical problems keeping Venezuelan firms from selling stuff abroad. Still, it’s nice to know that’s been taken care of…

1 COMMENT

  1. Mercosur is a basket case and the last thing it wants to promote is free trade. A “free trade” area, yes … and North Korea really is a “Democratic People’s Republic.”

    Bolivarian Venezuela will fit in just fine with those mediocrities.

  2. So, if Paraguay returns to full membership eventually, their Congress won’t have to vote the inclusion of Venezuela as a Mercosur member anyway? After all, they’re suspended, not expelled…

    Basically, the rest of Mercosur is kinda cheating its own rules to include Venezuela right now. What a pathetic joke these “multilateral organizations” are.. like UNASUR. That thing was DOA even before it started.

    • Two thoughts: 1. From the beginning, Chavez saw Mercosur as something for him to try
      and take over and subvert it to ALBA.
      2.Chavez never bothered with the rules of Mercosur-if he honestly looked at them then he would see that it is bad for Venezuela.
      Did your hear about the new organization just for middle-class Venezuelans
      called “SOREANUS”. I think Madura is going to be head of that one.
      His motto-“Learn to like it! I did and it has taken me far!”

  3. Mercosur increases the number of products for it which it may charge a 35% tax to 200. Why not make it infinite and give the term “35% non-free” trade a new name.

  4. Mercosur, Unasur, ALBA- all of these-erase borders and will be impossible to adjudicate.
    The biggest mess of all will be citizenship and people moving to other countries and becoming
    residents, etc.
    This will lead to more corruption, exploitation of labor, just an endless list of can of worms.
    Oh, the money laundering-ie new currency, etc. This is a nightmare come true
    Power-hungry thugs like Chavez see opportunity to exploit and abuse..
    Yes, I am very negative about it.

    • Bolivar dreams,Castro dreams, Chavez dreams, native american dreams, voodoo dreams-cocaine king dreams, dreams beyond your wildest dreams.
      1.”multi-polar world”-so a powerful empire of S. America will be formed-and have
      ALBA forces – multi-country military- a. liberate the islands of the caribbean from the
      colonial powers-including Puerto Rico. “Liberate” -the Falklands. etc.
      2.Move through Central America into Mexico- liberating from the “empire’-eventually
      to overturn the US and Canada and make the whole new world an empire-
      the Lion of the West- and it makes friends with the East (China)…in fact China feeds the Lion of the WEst and brings it to power to serve China..
      THis sounds like a science fiction movie- but power-hungry thugs like Chavez (little Hitler wannabes)are worshippers of this dream already. This myth is spreading throughout Latin America now.It is so shallow and false, but addictive.
      This will cost the nations billions upon billions and may end up costing millions of lives as well.It feeds the feeble, weak human psyche actually all around the world.

  5. Amazing that you could dedicate over a decade to studying the situation in Venezuela and just completely miss the reasons and motives behind the efforts to build a South American trade block. Honestly, I don´t know how you could have missed it. Ever heard of the old Andean Pact of the 1970s? Decision 24? Nothing?? Hilarious and sad at the same time.

    This has little to do with the tariffs that countries eliminate between each other, but rather the tariffs that a united block of countries can collectively administer against outside countries in order to promote internal economies of scale and have leverage in world trade negotiations.

    This is a sign that you might not have a very good understanding of what is going on in Latin America. You might be a red neck if….

    • “This has little to do with the tariffs that countries eliminate between each other, but rather the tariffs that a united block of countries can collectively administer against outside countries in order to promote internal economies of scale and have leverage in world trade negotiations” 0 Get a clue- you bought it!
      What about Colombian free trade agreement with US for example. Or, Chile’s Free Trade agreement with S. Korea???
      Anyway- none of this is the real issue esp. for Chavez.(Chavez- “commandante”-like a
      general-not just a Coronel??)You must know of “bolivar’s dream. do yo have any clue
      (get a clue- ha) about Castro’s dream(s)? Clueless- have you been listening – what
      does Chavez rattle and hum about on a daily basis? The freakin Bolivarian empire-blah-blah-blah.
      Chavez is a “dreamer” and he’s not the only one-the scary thingis he’s spending billions
      of el pueblo’s money to try and make his dreams come true.
      Finally, this is why Venezuelans and many S. Americans are silent about what Chavez is doing. -They are playing along- very much attracted to this MYTH.

      • VIP noche,

        You must be a very special guy. I´d really like to meet you…

        Torres,

        You apparently understanding nothing about how a trade block works, or even what it is. Thanks for playing anyway though. The pleasure is all mine.

        • Get a clue, I think it’s “bloc” not “block”, though block might be more what chavez is about…

          As to how a trade bloc works, each has it’s own unique features, but the Mercosur one happens to fall in the “free trade” category and specifically seeks to have its members trade with each other with preferential conditions over their trade with non members and to standardize their rates with respect to non members so as to create a united front.

          That all translates to: the more efficient ones win, the less efficient ones lose, as in most free market setups. In Venezuela’s monoproduct economy, the advantages of the free trade with members is lost while tending to flood the market with member products (certainly not the other way around) and tending to not maximize profits from freely selling our main product to the biggest buyers.

          I only go into it in more detail, for your pleasure. 😉

    • Get a clue, in any free trade agreement, the more efficient side will come out on top, even when as a group they are in a better postion against an external party. So even if Mercosur is stronger against say a European Union, or USA than any of its members would be alone, that comes at a higher cost for the less efficient nations within the group, read Venezuela. Venezuela’s joining is tantamount to a subsidy for Brazil and Argentina, at the cost of Venezuela’s poor, becuase I don’t think chavismo is going to skimp on their own lifestyles, only on that of other Venezuelans.

    • “Extrovertido, impúdico, carismático, Chávez, quien ha hecho del ejercicio del poder un espectáculo televisivo en el que se presenta como defensor de los pobres, azote de los ricos, continuador del libertador Simón Bolívar y antagonista del “Imperio”, como llama a EE.UU., fijó como rumbo el 7 de octubre y los 10 millones de votos que espera conquistar.

      Sobre Chávez hay quien sostiene que para los venezolanos su liderazgo tiene más de espiritual y religioso que de político y revolucionario. Por su discurso, fundamentalmente nacionalista, pasan Jesucristo, el Ché Guevara, Mao, Miranda, Tupac Katari o Marx en una extraña comunión que el mandatario consigue armar en una suerte de doctrina.

      Defiende el socialismo con la cruz en la mano, ora en silencio en una capilla mientras el país lo mira por televisión y va hacia una nueva operación en Cuba saludando desde un vehículo con una imagen de Jesucristo bajo la que se puede leer: “Y te sanaré”.

      Amigo de los líderes más controvertidos, como el iraní, Mahmud Ahmadineyad, o el fallecido dictador libio Muamar el Gadafi, Chávez conjuga el tradicional caudillismo latinoamericano con una prédica en defensa de las luchas sociales que un día bautizó con el pegadizo nombre de Socialismo del Siglo XXI”

      This is from an article describing Chavez today in La Patilla.
      [Please note the word “shameless”]

  6. Here’s an example of what I am talking about:
    La presidenta argentina, Cristina Fernández de Kirchner, abogó ante su millón 139 mil 167 seguidores en la red social por la profundización de la integración en la región.

    “Convocamos a toda la región a una unión mayor, una unión más ampliada que nos permita enfrentar una crisis producida en los países ricos”, expresó la mandataria argentina a través de su cuenta en la red social twitter @CFKArgentina.

    Agregó que “la unidad de la región debe tener como objetivo fundamental que la crisis impacte en la menor medida posible en el desarrollo de nuestros pueblos”.

    Además señaló que “el compromiso es que esta integración sea aún más amplia; convocar a todos los países de la región. Esto es lo que nos ha permitido crecer”.

    Kirchner wants everyone to join up and help get the Falklands back….
    (Chavez is ready to send Venezuelan military to fight England- you know this.)

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