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The third mandate of Lula began with diplomatic and economic articulations with neighbors from South America. In his first international official trip, Lula visited Argentina, where he spoke about the idea of a common currency. Later, he went to a meeting of the Community of Latin American and Caribbean States (Celac), where he spoke with Uruguayan President Luis Lacalle Pou about the free trade agreements that Montevideo is negotiating outside the Mercosur.
The Idea Behind a Common Currency
The project is still in its very early stages and, according to government sources, it does not mean the end of the Brazilian Real and the creation of a single currency, such as the Euro. The objective is to facilitate trade between the countries, which today is hampered by dependence on the dollar, a currency that Argentina has too little of.
The assessment is that Brazil’s space in Argentina’s international trade was occupied by China with financing in Chinese currency for Argentines to import products from the Asian giant.
Unlike to Happen
Analysts believe that the single currency in South America is unlike to take place. For them, Bloc has already failed to achieve integration goals simpler than monetary union.
A Threat to Mercosur
During the Celac meetings, Lula spoke to President Pou about the agreements that Uruguay intends to seal with countries like China and New Zealand. The trade deals have been criticized by other Mercosur members, due to the fact that it hampers the bloc’s own structure. For Chancellor Mauro Vieira, a free trade agreement between Uruguay and China would be the destruction of Mercosur. Vieira told media sources that if the nations negotiate outside the Common External Tariff, the tariff will be destroyed, thus, destroying Mercosur.
To attempt to solve the situation, President Luiz Inácio Lula da Silva (PT) promised to accelerate negotiations for the bloc’s agreement with the European Union and said he was open to talking about an agreement between the bloc and China, thus making the deal with China a common negotiation for all members of Mercosur.
