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Brazil's President Elect Urges Increased Cooperation in Regional Trade Bloc - 2002-12-02

Brazilian President-elect Luiz Inacio Lula da Silva has called on Argentina to work with Brazil in strengthening and expanding the four-nation trade bloc, known as Mercosur. Mr. da Silva made the appeal in Buenos Aires Monday, on his first trip abroad since his landslide election in late October.

After meeting with Argentine leader Eduardo Duhalde, President-elect da Silva Monday addressed the Argentine people, saying his future government wants to work with Brazil's partners in strengthening Mercosur. He said the problems affecting the four-nation trade bloc, made up of Argentina, Brazil, Paraguay and Uruguay, are caused by the economic problems of each member, and can be overcome.

Mr. da Silva blamed what he called "mistaken" economic policies for the crises affecting the Mercosur nations. In recent years, he said, "political and economic options, which were not in the national interests of our countries, led us to successive crises." He said inflation and recession have de-railed the region's development, and caused social misery.

Argentina is in the midst of its deepest recession in decades, while Brazil has seen its economy slowed and currency devalued by some 40 percent this year. These problems have cut trade in half between the two main Mercosur partners. Bilateral trade this year is estimated at only $7 billion, compared with more than $14 billion five years ago.

This decline in turn has affected Mercosur. Brazilian exports to Mercosur fell by more than half to $2.7 billion in the first 10 months of this year, compared to last year.

President-elect da Silva called for adopting policies to strengthen trade, and to include Chile and Bolivia, which are associate members, as full Mercosur partners. He said the trade bloc should be more than a customs union, and should move forward toward economic integration, modeled on the European Union.

By strengthening Mercosur, Mr. da Silva said, the region can establish a common front in negotiations with the United States, to create a western hemisphere free-trade zone.

Mercosur's common external policy, he said, "will be essential in free trade negotiations, and these negotiations have to be conducted in the defense of national and regional interests, to protect our systems of production, and jobs."

For his part, President Duhalde in remarks preceding Mr. da Silva's speech, said the future of Mercosur is in the minds of all Argentine political parties. Argentina will hold presidential elections in April.

Mr. da Silva, who arrived in Buenos Aires Sunday, is on his first foreign trip since the election. He travels to Santiago next, where he will meet with Chilean President Ricardo Lagos on Tuesday. Mr. da Silva's trip to the two South American countries comes a week before he meets with President Bush at the White House on December 10.