Venezuela set to join Mercosur

Venezuela was on Tuesday poised to become the fifth member of Mercosur, an addition that could accelerate the South American trade bloc’s steady drift away from free trade principles.

The presidents of the current members of Mercosur – Argentina, Brazil, Paraguay and Uruguay – were last night due to sign a treaty in Caracas with President Hugo Chávez.

The move combines South America’s largest oil exporter with two of the world’s largest grain and meat producers to create a grouping of some 250m people.

Pavel Rondón, Venezuela’s deputy foreign minister for Latin America, said the move to join the 15-year-old bloc would “open up a huge market . . . for the country’s businesses”.

But domestic critics – principally those same local businesses – claim they were never consulted over a decision they say is more motivated by Mr Chávez’s political agenda than by economics.

Venezuela is only really competitive in the area of oil, an export commodity that does not require trade agreements. “The government has taken this decision guided by geopolitical criteria rather than by economic motives,” said José Luis Betancourt, head of Fedecamaras, the national business federation.

While Argentina and Brazil have officially embraced Venezuela’s entry, business groups in those countries have warned Mr Chávez will use the trade bloc not only to propagate policies opposed to free trade but also as a platform to rail against the US.

That, they say, could undermine already weak cohesion within Mercosur.