Mercosur agrees plan for investment, trade growth

FOZ DO IGUACU, Brazil, (Reuters) – South American  trade bloc Mercosur launched a plan yesterday to adopt common  trade, investment and immigration policies to help underpin  unprecedented economic growth in the region.  

Under the plan, the four member countries — Brazil,  Argentina, Paraguay and Uruguay — agreed to draft common  investment guarantees, anti-trust laws, and a single policy on  the automotive industry. They also intend to eliminate barriers  to service industries and tariff exemptions on goods that have  undermined the cohesion of the customs union. 
 
Delayed by nearly a decade of political and economic crises  that risked tearing the trade bloc apart, Mercosur this year  regained some of its momentum and regional leaders again are  speaking of creating something similar to the European Union in  South America.  

Mercosur economies are growing at an annual rate of between  7.5 percent and 9 percent, and internal trade, including that  with prospective member Venezuela, has jumped to nearly $40  billion from a fraction of that a few years ago. 
 
“Mercosur was going to disintegrate. Despite the  pessimistic forecasts, it’s moving forward,” said Brazil’s  outgoing Foreign Minister Celso Amorim on the sidelines of a  Mercosur summit in Foz do Iguacu, the site of world-famous  waterfalls. 
 
The group’s growing cohesion could also help strengthen  South America’s bargaining power in trade negotiations with  other countries and blocs, such as the EU.  

“It’s becoming a growing reference point for international  investment,” Amorim said, citing meetings he had yesterday  with trade representatives from Australia, the United Arab  Emirates and Turkey. 
 
Mercosur’s plans to adopt investment guarantees coincide  with growing cross-border investments in the region,  particularly by Brazil. Some of those have come under threat. 
 
Bolivia nationalized Brazilian oil and gas assets in 2006,  Ecuador has had disputes with Brazilian construction and oil  companies, and Brazilian farmers have been threatened with  expulsion in Paraguay.  

In a symbolic display of unity, a bus that is to carry the  summit leaders on Friday will display a new Mercosur license  plate that is to be adopted throughout the region in coming  years to facilitate travel and curb cross-border auto theft.  

“We want to put Mercosur in everyone’s garages,” said  Antonio Ferreira Simoes, a senior Brazilian diplomat who was  involved in drafting the plan. 
 
He said the union’s 240 million inhabitants were also to be  given common identity cards in the coming years.  
Mercosur moved in June to streamline the union’s common  external tariff, ensuring the free circulation of goods by  2014. Entrepreneurs had long complained of having to pay import  tariffs more than once in what should be a single customs  union.

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