Venezuela & MERCOSUR

MERCOSUR – the Incorporation of Venezuela

By Mauricio López Dardaine

Apart from political speculation regarding Venezuela, there is also the practical question of re-creating Mercosur; a block extending from the Caribbean to Tierra del Fuego. In this respect, there are actually five pillars, according to the Protocol signed for the incorporation of Venezuela into the southern trade block:

ü     The adoption of the Mercosur Common Nomenclature by Venezuela

ü     The adoption of the External Common Tariff

ü     The convergence towards a free trade area by the five countries (Argentina, Brazil, Paraguay, Uruguay and Venezuela)

ü     The adoption of Mercosur’s common legislation

ü     The negotiations for the incorporation of Venezuela as a party regarding those agreements already signed by Mercosur with third parties and also the participation of Venezuela as a party vis-à-vis those negotiations Mercosur is at present involved in, such as Mercosur – European Union.

On December 26^th, 2012, Venezuela signed three agreements with a view to shortening the road towards the third target:   convergence towards a free trade area by the five countries (Argentina, Brazil, Paraguay, Uruguay and Venezuela).

To make this comment a short one, we must pass over the technical complexities involved. But because what was signed, within the framework of the ALADI (the Latin American Integration Association sited in Montevideo, under the legal umbrella of which Mercosur operates) has a direct bearing on business transactions -exports and imports within a Mercosur with Venezuela- we need to tell you about the essence of these three agreements.

The three are referred to the Protocol for the incorporation of Venezuela, but they are different in scope.

The one signed with Uruguay means 100 percent rebate for all tariff positions, these rebates being granted as from now by both countries. The exception being the automobile sector, at present operating under ALADI Agreement Nº 59. Negotiations in this respect have already been announced.

With regard to Argentina and Brazil, the scope is different, even if the target is also convergence to a full fledged free trade area. Here Argentina and Brazil grant Venezuela a 100 percent rebate as from January 1^st, 2013, while Venezuela will do the same as from January 1^st, 2014, except for a list of tariff positions that will only reach the 100 percent rebate mark in 2018. In the case of Brazil, for instance, the number of exceptions covers 777 tariff positions.

It must be borne in mind that, until pillars one and two are perfected (adoption of both the Mercosur Common Nomenclature and of the External Common Tariff by Venezuela), all these rebates will operate with regard to Mercosur’s nomenclature and external common tariff for Mercosur countries, and with regard to the Venezuelan customs system, respectively.

A similar agreement with Paraguay ought to be signed during 2013, once Paraguay is back (Paraguay was temporarily suspended, following procedures that remain under a veil of controversy).

These ALADI agreements, a sort of short cut towards the target involved in the third pillar, show strong political and administrative commitment. One must wonder, of course, whether political events in Caracas will influence the incorporation under way; here we have only considered what is of practical interest from the point of view of trade opportunities.

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