Associated Press / By TONY SMITH, AP Business Writer
FLORIANOPOLIS, Brazil (AP) - They agreed on tarifs and an auto deal, but what the leaders of the Mercosur trade bloc really wanted to know as they opened their 19th summit Thursday was what sort of trade policy U.S. President-elect George W. Bush had in mind for the region.
Despite Bush's reputation as a free trade warrior, there was no consensus on whether the new president would be able to push through a key all-American free trade area by 2005, or even whether that was what would be best for South America.
Many South American countries marvel at the heady economic growth that the North American Free Trade Agreement has brought to Mexico. But some, especially the regional giant, Brazil, fear their industries are not ready to compete against the best of U.S. business and their markets would be swamped.
The summit of leaders of the four Mercosur members - Argentina, Brazil, Paraguay and Uruguay - plus associate members Bolivia and Chile huddled all day at a heavily guarded luxury resort on this island of 100 beaches.
They were joined by South Africa's Thabo Mbeki who is here to sign an association agreement.
After agreeing a package of macroeconomic convergence measures Wednesday, leaders endorsed a reduction of the bloc's common external trade tarif Thursday.
The duty is to fall by three percent over the next three years, canceling out a 3 point rise in 1997.
A wide-ranging agreement on auto production and trade within the bloc was in sight, said Brazil's ambassador to Mercosur, Jose Botafogo Goncalves.
But much of the talk in the corridors of the Costao do Santinho resort was of the new man in the White House and what his arrival would mean for the Americas, both North and South.
The summit's host, Brazilian President Fernando Henrique Cardoso, sent a message of congratulation to Bush early Thursday.
"By putting relations within the hemisphere as one of the priorities of your foreign policy agenda, we are certain that, together, we can make this century the century of the Americas," Cardoso wrote.
Bush's free trade reputation has given South America hope that preparations will now intensify for a Free Trade Area of the Americas, or FTAA, planned for 2005.
"Bush's commitment to the FTAA is exactly the sort of thing that is needed these days to improve relations between the United States and the region," Chile's Finance Minister Nicolas Eyzaguirre told The Associated Press.
"But there's still a big question mark over what exactly his policy will be," he added.
Speaking to reporters, Cardoso struck a more combative note, saying Bush in the White House was "neither better nor worse" for Brazil and the country would "continue to defend our national interests in the same way."
He stressed that economic integration within Mercosur would continue but that it was "not a rejection of the FTAA."
In general though, the pro-business lobby in Brazil, which makes up about half of South America's population and economic output, was happy with the Bush win.
"A Bush win is generally positive for South America," said Marcelo Carvalho, chief economist at J.P. Morgan in Sao Paulo. "My impression is that this will be a major tonic for the FTAA - by all accounts, Bush will be much more active on this front than Gore would have been."
Mario Garnero, a leading Brazilian businessman and friend of the Bush family, wrote an editorial in respected daily Estado de Sao Paulo praising the commitment of both Presidents Bush - father and son - to South America.
"The new interaction between a Republican White House and Congress should facilitate the granting of fast track powers," Garnero wrote.
Fast track powers, granted by Congress to the U.S. president, are seen key to accelerating negotiations for the FTAA, a huge free trade zone that would cover 34 countries.
Negotiations could pick up speed after the third Summit of the Americas slated for April in Quebec.
Others see Bush a prisoner of consensus politics, after his hair's breadth win over Vice President Al Gore.
"Bush probably won't get fast track quickly," said David Fleischer, political scientist at the University of Brasilia. "The senate is divided, some Republicans are against it, and Bush isn't likely to get it without some quick and dirty horse-trading."
More to the point, South Americans will be watching to see how willing Bush is to open up U.S. markets to farming products and other raw materials.
"If a Bush win means more open markets (in North America), then a Bush win is a victory for Latin America," said Morgan's Carvalho.
Fleischer was more sceptical: "I don't see Bush as being any less protectionist," than Gore.:
