Mercosur Leaders Urge Shift away from US Dollar, Call for Patent-Free Flu Drugs

29 July 2009

Presidents representing the member countries of Mercosur, the South American trade bloc, gathered for a summit last week in Asunción, Paraguay to discuss trade, regional integration and public health.

The meeting's agenda included various proposals to further the trading bloc's goals of free trade and economic integration within the Mercosur bloc, which includes Argentina, Brazil, Paraguay and Uruguay. Bolivia, Chile, Colombia, Ecuador and Peru are associate members of the group, and Venezuela has an active bid to join (see Bridges Weekly, 11 July 2007,ávez-casts-cloud).

On the integration front, the leaders agreed on a proposal to replace the US dollar with their own currencies in inter-regional trade transactions. The move allows "more independence from the dollar and less tension in financial markets of both countries," said Argentine Economy Minister Amado Boudou, according to a report in the Wall Street Journal.

The system would extend to all members the initiative that Argentina and Brazil began in 2008 to de-link their currencies from the US dollar in bilateral trade transactions. This plan is the latest in an effort led by Brasília and Buenos Aires to open cross-border trade; earlier this year they expanded a credit line for trade operations, and their central banks recently established a currency swap worth the equivalent of US$ 1.8 billion, which has yet to be signed.

In another move to promote cross-border trade, the bloc signed an agreement to strengthen economic ties with South Korea by creating a joint advisory group to promote trade, exchange information, and identify common interests between the new partners.

Swine Flu Vaccine:  Call for Patent Rights Exception

Turning their attention to health matters, the presidents of Argentina and Brazil urged that patent rights be waived for the H1N1 flu vaccine for developing countries, citing a provision in the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights that provides for flexibility in matters of public health.

Argentine president Cristina Fernández de Kirchner stressed in a speech that both her country and Brazil have the capacity to produce the drug, and that exercising patent rights for economic benefit in this case "would condemn millions of people to death."

Earlier this month in Buenos Aires, health ministers raised concerns that vaccines expected to be available this autumn were pre-destined for the US, EU, Australia and other rich nations.

"The manufacture of these products should be facilitated to the greatest possible number of centres," the trading bloc's statement said, so that all governments -- of both developed and developing nations -- may meet the needs of their people.

Argentina has already recorded 165 swine flu deaths, second only to the US, where 263 people have died of the illness when Bridges went to press.

Leaders also condemned the coup d'état against the government of Honduras and expressed full support of ousted President Manuel Zelaya, issuing a statement refusing to recognise the legitimacy of the interim Honduran government. Paraguayan President Fernando Lugo told participants that the coup reveals the fragility of democracies in Latin America.

ICTSD reporting; "Plan: No More Dollar in Deals Between Brazil and Mercosur Partners," BRAZIL MAGAZINE, 23 July 2009; "Mercosur urges patent-free swine flu treatments," AFP, 25 July 2009; "2nd UPDATE: Argentina, Brazil Question Swine Flu Vaccine Patents," DOW JONES, 24 July 2009; "Mercosur's 37th Summit: Summit concludes with a step forward," BUENOS AIRES HERALD, 27 July 2009; "Mercosur signs trade agreement with S Korea," XINHUA, 25 July 2009; "Mercosur Summit Denounces Honduras Regime," NASDAQ, 27 July 2009

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