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Last Updated: Thursday, 19 June, 2003, 04:58 GMT 05:58 UK
South American unity pledge
By Tom Gibb
BBC South America correspondent

South American leaders have ended a summit in the Paraguayan capital, Asuncion, with a promise to revitalise and expand the trading bloc, Mercosur, which has been seriously damaged by years of economic crisis in the region.

Recent recoveries in the two largest economies, Argentina and Brazil, are now creating much better prospects for closer integration.

Argentine President, Nestor Kirchner (let),  Brazilian President Inacio Lula Da Silva (centre) and Venezuela's Hugo Chavez, Asuncion, Paraguay, 18 June 2003
There are plans to expand the trading bloc

The move to rebuild Mercosur is being led by the presidents of the two countries, who both took office this year.

They want to aim for a South American alliance based on the model of the European Union.

But that is still a long way off.

Brazil's President, Luiz Inacio Lula da Silva, known as Lula, promised to work every minute to consolidate the dream of Latin American unity.

But he and his colleagues will be starting almost from scratch.

Mercosur members

First they have to eliminate tariff differences which have become more acute within South America over the last few years.

Lula said that recovery in Brazil and Argentina would now make that possible.

There are plans to expand the bloc to include Chile, Bolivia and Venezuela, and there is talk of creating a Mercosur parliament and a joint currency. But, again, as yet there are no concrete proposals.

In the short term, Lula wants to get a joint strategy to give greater strength in trade negotiations with the United States.

He will now travel to Washington to meet President George W Bush.

Argentine economy's signs of life
16 May 03  |  Business
Lula pushes Brazil reforms
01 May 03  |  Business
Chile still interested in Mercosur
27 May 02  |  Business

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