Hello and welcome to the Latin America Weekly newsletter! This week: a recent tariff reduction agreement gives hope to the future of Mercosur, but more conflict is on the way. Peru’s executive and legislature lock horns once again. Chile holds its presidential debates.
Tariff reduction deal alone won’t save Mercosur
No Mercosur deal that excludes the trading bloc’s two biggest partners Argentina and Brazil is worth writing home about. So, when the two South American giants finally committed to cutting common external tariffs by 10 percent last Friday, it came as a landmark for a bloc that seemed on the verge of disbanding due to its members not seeing eye-to-eye on trade.
- But although the deal could help quell demands for liberalization coming from Brazil, Uruguay, and Paraguay in the short term, there is still much conflict on the horizon.
Problems ahead. While member countries have free reign to lower around 75 percent of tariff lines if they so desire, the deal excludes sectors that Argentina considers as especially “sensitive,” such as textiles, footwear, and home appliances — as well as the car industry, which is regulated by a separate agreement.
Why it matters. A deal with so many exceptions...