Chavez hosts six-nation summit to mark Venezuela’s entry into Mercosur trade bloc
CARACAS, Venezuela – President Hugo Chavez marked Venezuela’s entry in the South American trade bloc Mercosur with a six-nation summit Tuesday, a step expected to further his battle against U.S. free trade deals.Chavez held talks with Argentine President Nestor Kirchner ahead of the meeting with leaders from the other member countries – Brazil, Uruguay and Paraguay.Bolivian President Evo Morales, a close Chavez ally, also was to attend the signing ceremony sealing Venezuela’s entry into the bloc, though he has yet to make his own formal overture to become a full member.Chavez, who blames U.S. trade liberalization policies for creating poverty, has called the expansion of Mercosur a “historic step” toward South American integration and a victory against Washington’s “imperialist” economic plans for the hemisphere.Oil-producing Venezuela’s entry into Mercosur is expected to boost the clout of the trading bloc, bringing Mercosur’s total combined gross domestic product to $1 trillion a year – more than three-quarters of South America’s total economic activity.Under the agreement, Venezuela will be required to adopt a common external tariff system within four years. The level of those tariffs will vary depending on the product but will average about 12 percent, said Eduardo Sigal, Argentina’s undersecretary for economic integration.Venezuela and the continent’s two largest economies – Brazil and Argentina – will establish free trade zones by 2012. Paraguay and Uruguay will benefit immediately from preferential tariffs for their principal exports to Venezuela before gradually establishing free trade zones by 2013.Venezuelan critics, largely allied with the political opposition, said the government failed to sufficiently consult Venezuela’s private sector about details including the need for measures to protect local industries from cheaper imports.”The government has made a decision in which geopolitical criteria have prevailed over economic criteria,” Jose Luis Betancourt, president of the main business association, Fedecamaras, told the Venezuelan radio station Union Radio.Betancourt said Venezuela – the world’s fifth-largest oil exporter – would have little trouble exporting its fuel or aluminum, but that other locally products could struggle against the competition.Chavez also has proposed a massive natural gas pipeline that would carry gas from Venezuela’s offshore reserves to Brazil, Argentina and other countries. He has suggested Bolivia – which has the continent’s second-largest gas reserves after Venezuela – also could be connected to send its gas to other countries.The Venezuelan government said in a statement Tuesday that the visiting leaders would also sign an agreement for Bolivia, Paraguay and Uruguay to participate in the pipeline project.The proposed 5,600-mile pipeline would be one of the longest ever built. Chavez had said the project will attract foreign investment and eventually bring lower energy prices through cheaper natural gas.The plan has met with skepticism, however, from energy experts who say it faces enormous technological, environmental and economic challenges. Though cost estimates for building the pipeline remain rough, the Brazilian oil company Petroleo Brasileiro SA has said the price tag could run to more than $25 billion.