MERCOSUR - administrative intricacy

The administrative intricacy of Mercosur

By Mauricio López Dardaine

T

he political decision to incorporate Venezuela into Mercosur we have commented upon in previous notes. We have also hinted at the administrative difficulties this pronouncement entails.

To wit: 1) Venezuela must adopt the Mercosur Common Nomenclature; 2) they must also adopt Mercosur’s External Common Tariff; 3) all of Mercosur’s legislative patrimony; and last but not least (4) establish a full fledged free trade area with all four Mercosur countries (Argentina, Brazil, Paraguay and Uruguay).

Up to this week, meetings -following the Summit held in Brasilia- are still going on between Venezuela and Mercosur. A four year period divided into stages has been defined regarding the adoption of tariffs. During the first stage, tariffs that differ by plus 2 or minus 2 percentage points will be adopted. One must bear in mind the differences between the Venezuelan nomenclature and that of Mercosur, and also the differences between tariff levels for similar product lines. Other issues that are still being debated are how will Venezuela converge towards the internal free trade area, and also how will the importation of capital goods be considered from the tariff point of view. The latter is a question that has been the subject of a long controversy among the four original Members of the block. And the final word has yet not been uttered.

However, Venezuela is already sitting with a voice and a voting power at the Mercosur Commerce Committee and the other administrative joint bodies. Prize without having paid full fare?

As we said a few days ago, the new conformation of Mercosur will mean a wider range of business opportunities, but also more complexity when one has to calculate nominal tariffs and actual rebates. Those firms operating within and outside Mercosur will have to study their new options and re-analyse their costs.

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