The Entrance of Venezuela to Mercosur, as a Consequence of the Exclusion of Paraguay
This is a new that might change the whole process of integration of South-América.
The entrance of Venezuela to Mercosur was blocked by the Parliament of Paraguay, the same legislative body full of landowners that committed the recent coup against Pres Lugo.
Now with the suspension of Paraguay from Mercosur, the remaining countries authorized the entrance of Venezuela as full member of Mercosur from July 31, 2012.
This could change the map of integration of South America. The entrance of Venezuela, -with its politically well oriented government and its powerful economy-, will reinforce Mercosur very much.
This will also difficult very much the task of Commissioner De Gucht to negotiate trade agreements with this region.
The intent of the EC to negotiate a FTA with Mercosur was meeting difficulties, because of the adoption by Argentine of some projectionist measures, and by its recent move concerning Repsol. With Venezuela inside Mercosur, things might be even much more difficult .
But moreover, the reinforcement of Mercosur could also difficult for De Gucht the conclusion of negotiation with other countries. Ecuador for example, whose government is hesitating to engage trade talks with the EU due to the pressure exerted through the banana deals and the revision of GSP. EU officials said clearly that if Ecuador signs with the EU it cannot join Mercosur. This reinforcement of Mercosur and the decision of this block to clearly condemn the coup in Paraguay, might play in favor of a decision of Ecuador to join Mercosur instead of continuing its trade talks with the EU.
Yesterday Ecuador seemed isolated between Colombia and Peru, two countries that signed a FTA with the US and the EU. In the future those two countries could seem isolated, in front of a reinforced Mercosur.
MERCOSUR is unfortunately only a purely trade association. But completed with UNASUR and its political integration, it could provide to the region a key instrument for an integration that would include an important concrete economical dimension that the EU, the US and China will be obliged to take into account.