Is there any real possibility that the negotiations for the Association Agreement between Mercosur and the European Union could be concluded this year and that the path leading to its entry into force could then begin?

There are still some doubts in this regard. These doubts do not only relate to the actual signing of the agreement and the start of the formal process of its entry into force, but to the effects that such entry into force could have on Mercosur itself, depending on the procedure for its parliamentary ratification.

With respect to the latter, it is often pointed out that the Mercosur countries have agreed to a bilateral validity process, whereby the agreement does not apply to the country that has not ratified it, or until it does not ratify it.

Taking into account the text of the Treaty of Asuncion, it may be legally questionable that its validity could be achieved without the agreement having been ratified by the four member countries.

But if this same procedure were eventually applied to the Mercosur-EU Agreement, wouldn't the Mercosur customs union be transformed into a free trade zone and wouldn't the trade preferences agreed in the Treaty of Asuncion be diluted? This is not a minor issue, not only because of its legal implications, but also because of its economic and, above all, political consequences.

The Association Agreement between Mercosur and the European Union could be entering its final stage. Is this really so? Is there any certainty that the negotiations will be concluded this year and that the path leading to the entry into force of the agreement could then begin? There are still many doubts in this regard.
In this opportunity, we will address the factors underpinning these doubts. They do not only refer to the eventual signing of the agreement and the formal initiation of the process of its entry into force. They also refer to the effects that such entry into force could have on Mercosur itself, depending on the procedure for its parliamentary ratification.

In fact, a procedure has been anticipated that would mean that the entry into force of the agreement would be effective, in the case of Mercosur members, as soon as a country approves it in its national parliament, without the need for it to have been approved by the parliaments of the other countries as well. The effects of the agreement would then be limited to the member countries whose parliaments had approved it, but not to all. Such a situation would leave the country or countries that do not ratify it out of the agreement. Potentially, this situation could be prolonged for an indefinite period of time.

This is an issue that we have previously discussed (see, for example, our newsletter of March 2020). At that time, we pointed out that, after the signature of the agreement, the next step in Mercosur would be its approval by the respective national parliaments and its subsequent ratification. We also added that once signed and ratified by the four Mercosur member countries and the EU, the agreement would enter into force.

Taking into account the text of the Treaty of Asuncion, it could be legally objectionable that such validity is achieved without the agreement having been ratified by the four member countries. This would seem to be the case if we take into account the provisions of Article 1 ("common external tariff") and Article 2 ("reciprocity of rights and obligations"), because of the fact that Mercosur is a customs union and because of the role of the common external tariff as a key instrument in it.

At that time, we also pointed out other possible scenarios regarding the future of the formal relations between Mercosur and the EU, depending on the outcome of the approval process and the effective entry into force of the bi-regional agreement. These are scenarios with clear implications for the existential dimension of Mercosur (why the member countries decided to partner) and in its methodological dimension (how the joint work between the associated countries is developed). There are also clear political and economic implications for the future relations with the EU and among the Mercosur countries themselves.
The first possible scenario is that the remaining steps are taken as planned and, therefore, the agreement that is finally concluded enters into full force in all Mercosur countries.

In the second scenario, one or more Mercosur countries do not sign or ratify the agreement because they do not accept the terms concluded in the negotiation process. This could also happen on the European side and, in this case, the bi-regional agreement would not enter into force. But in the case of Mercosur, could the agreement enter into force if, for example, only one of the member countries decided not to sign or ratify it?

As far as ratification is concerned - but not with regard to the signing- it is often pointed out that the Mercosur countries have agreed on a process of bilateral validity, that is to say that the agreement would not apply to a country that has not ratified it, or until it decides not to ratify it. Although the actual text of this agreement has not yet been published, this so-called bilateralism could have consequences that go far beyond the bi-regional agreement and even penetrate deeply into the existential dimension of Mercosur and the relations between its members.

Although the bi-regional agreement with the EU has very different scopes, it is often pointed out that the bilateral entry into force of a free trade agreement has precedents in Mercosur. It is included, for example, in the free trade agreement between Mercosur and Israel and in the agreement concluded between Mercosur and EFTA.

But if the same procedure were applied to the Mercosur-EU agreement, wouldn't the Mercosur customs union be transformed into a free trade zone and wouldn't the trade preferences agreed in the Treaty of Asunción be diluted? This is not a minor issue, not only because of its legal implications, but also because of its economic and, above all, political consequences.

The topics mentioned in the preceding paragraphs are related to those previously addressed in our newsletters of the months of July, September and December of 2019 and February, March and August of 2020 (see www.felixpena.com.ar).

Lecturas recomendadas:

• Alvarez, María Victoria, "El acuerdo comercial entre el Mercosur y la Unión Europea. Su proceso de ratificación y el mito de Sísifo", Foreign Affairs Latinoamérica, vol.21, número 2, Abril-Junio 2021, ps.46-52. Disponible en www.fal.itam.mx.
  
• CEPAL, "Perspectivas del Comercio Internacional de América Latina y el Caribe. El desafío de dinamizar las exportaciones manufactureras", CEPAL Naciones Unidas, Santiago de Chile 2022.
  
• INTAL-BID, "Conocimiento de Exportación: la era de los servicios en América Latina", Revista Integración y Comercio, año 26, número 48, BsAs diciembre 2022.
  
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