The presidents of Argentina and Brazil today signed a package of accords intended to promote economic integration and to bring Latin America closer to its elusive dream of a common market.
In an evening ceremony reflecting the growing good feelings between South America's two biggest nations, Argentine President Raul Alfonsin and Brazilian President Jose Sarney penned their names to 11 protocols establishing a customs union for capital goods and outlining cooperative ventures in the fields of agriculture, energy and biotechnology.
Searching for historical parallels to today's action, commentators here likened it to the coal and steel pact signed by France and Germany three decades ago that evolved into the European Economic Community.
But businessmen in both countries were skeptical about the prospects of integrating their contrasting economies and cautioned against expecting too much. Fears among industrialists here about opening Argentina's outmoded firms and depressed markets to Brazil's booming economy led to a limiting of the government-to-government agreements.
The integration of the two national economies will begin with capital goods, in hopes of boosting bilateral trade from $300 million to $750 million dollars.
The agreement was signed during a three-day visit to Argentina by Sarney, the first elected Brazilian leader to visit here in 25 years. "Never before have we been so close together, never before have we had so many positive opportunities," Sarney said on his arrival Monday.
Alfonsin said the unfavorable world economic climate was one factor pushing Argentina and Brazil together. The two countries, he said, face restrictions caused by a fall in international commerce, unsteady financial markets, the burden of foreign debts and deteriorating trade terms. "All of that brings us together and places us on the road of homemade solutions," the Argentina leader said.
Other Latin American states welcomed the move. Uruguayan President Julio Sanguinetti, whose small country is sandwiched between the two large powers, flew to Buenos Aires today to meet with the other two presidents to highlight his interest in eventually joining the economic union. "Today is a fiesta for Latin America," he remarked.
The idea of creating a Latin American common market has been foiled for decades by political unrest, national antagonisms and varying development levels. By taking a first step, Brazil and Argentina, which together account for more than half of South America's population and about two-thirds its land mass, hope to provide a framework for an eventual region-wide economic community.
"This program constitutes a renewed impulse for the integration of Latin America and the consolidation of peace, democracy, security and the development of the region," Sarney told the Argentine congress today.
But the differences between the Brazilian and Argentine economies complicate any attempt to integrate even those two. Brazil has more than four times Argentina's population and more than five times its gross domestic product. For the past decade, Brazil has been experiencing a development boom while Argentina -- once Latin America's industrial leader -- has atrophied, struggling along on a strong agricultural sector.
Argentine officials and businessmen sought to avoid a union with Brazil that would result simply in an exchange of Argentine wheat and beef for Brazilian tools and machinery. Agreement was reached to focus on creating a larger capital goods market for both countries. Capital goods were picked because they are the most manageable sector of the economy and also are a main growth factor.
At present, Argentina sells $50 million worth of machinery a year to Brazil, which sells three times that much to Argentina. The new accord envisages a rise in Argentina's sales to $150 million next year.
Roberto Favelevic, president of the Argentine Industrial Union, warned against "exaggerated expectations," saying integration was a matter of years and that negotiations with Brazil would have to proceed with "prudence" because the industry of the giant neighbor "is without any doubt much greater and more dynamic than our own and even more modern in many branches." He noted that the United States and Canada have complimentary economies and close trade ties without formal integrating mechanisms.