Speech given at University of Southern California, São Paulo, Brazil, November 09, 1999.

1.- Short Notes on the History of South America.

2.- Current Economic and Political Situation in Brazil:

i) re-democratisation;
ii) new constitution;
iii) reforms on taxation; social security and judiciary;
iv) macro-economic aspects;
v) the Real Plan, characteristics;
a) pillars, exchange rate and interest rate;
b) lack of fiscal adjustment;
vi) the Brazilian economy in the 90`s; and
vii) the political quandary.

3.- Mercosul: Formation and Evolution:

i) The Uruguay Round of the GATT and the move towards regionalism, NAFTA, MERCOSUL and the FTAA;
ii) Objectives and first successes of Mercosul;
iii) Exclusionary trade or possible trade (59% agriculture);
iv) Distortions, shortcomings and the exchange regime;
v) The fiscal weakness in Brazil;
vi) The adverse international situation.

4.- Mercosul and the Current Crisis:

i) Investment diversion;
ii) Economic discrepancies;
iii) Currencies and exchange;
iv) Troubled sectors: sugar; automotive; paper; textiles; poultry; shoes; steel.

5.- Future risks:

i) multilateral, WTO (social dumping, multilateral agreement on investments, agriculture, services, environment, etc.);
ii) regional, FTAA (agriculture, services, etc.);
iii) international (IMF, institutional); and, but not least,
iv) local.

6.- Conclusions.