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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2024 | 2023 | 2022 | 2021 | 2020 | 2020 | 2019 | 2018
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009
THE CURRENT VALIDITY OF MERCOSUR'S ACCUMULATED EXPERIENCE

por Félix Peña
January 2024


 

In order to better understand the current debate on the methods of joint work between Mercosur member countries, as well as on the future development of the Latin American regional integration process, it is advisable to look back to its past and, especially, to its founding stages.

In this opportunity we have revisited what we expressed in our May 2023 Newsletter regarding our vision of Mercosur's cumulative experience.

We conclude with some suggestions that we believe may be useful when considering proposals for future action to build on the experience already gained.

In particular, we believe, as we have stated on other occasions, that LAIA continues to be one of the most appropriate frameworks for the development of the processes of gradual construction of economic integration among Latin American countries, and especially among the countries of the South American region.


A central idea that has been presented throughout the twenty years of the publication of our Newsletter has been that the new international realities, both at the global level and in each of the different regions, have generated the need to adapt the working methods and institutions used for the joint work of the countries that share a region, with a particular focus on the countries of South America.

In order to better understand the debate on the methods of joint work between Mercosur member countries, as well as the future development of the regional integration process, it is advisable to look back at its founding stages.

Mercosur's founding strategic idea was to form a customs union and then a common market, in order to open up to the world and to negotiate jointly, especially with the US and the EU, and within the framework of LAIA and the WTO, as well as with other countries. This explains the definition included in the Treaty of Asunción of a common external tariff "to encourage external competitiveness".

The founding idea was clear: to deepen integration in order to build a credible regional environment favorable to valued internal processes-politically, democracy; economically, productive transformation; socially, equality-and to the requirements of competitive insertion in the world, as well as to attract investments, which would allow the partners to be an active part of the internationalization of global production. Mercosur then appeared as the backbone of the idea of a solid strategic alliance-open to the world-between two contiguous major South American economies, to which Paraguay and Uruguay were later added.

Creating a common platform to compete and negotiate in the world was, and still is, one of the key purposes of the project launched in June 1990 in Buenos Aires and based on the progress achieved in the bilateral project between Argentina and Brazil (PICAB), initiated in 1986.

The founding idea was, and still is, to constitute a " hard core" that would facilitate, through economic integration, the political stability and economic and social development of the entire South American region, with a clear Latin American scope.

It is therefore advisable to examine the roots of an integration process such as Mercosur, since many of the positions adopted today by the main protagonists seem to be the result of a tendency to underestimate the historical background that explains the commitments made, or to confuse the sequence of events and their connection with a systemic perspective.

Discontinuities in the previously defined paths, without necessarily responding to new realities, could affect the international credibility of the Mercosur countries, drastically reducing the effectiveness of the common project in the fierce global competition to attract productive investment, and affecting its quality as a valid interlocutor in complex international trade negotiations. They also have a high economic cost, albeit imperceptible in the short term, by discouraging productive investment in industrial location decisions.

As we have pointed out on several occasions in our newsletter, it is undeniable that, thirty years after its creation, Mercosur still needs to be modernized and its objectives and working methods adapted to the present and the future.

The problems it faces are largely the result of changes in global and regional realities that have taken place since its inception. They are also the result of current difficulties, which often affect the priorities of its member countries. But they are also often the result of the working methods used by the partners in their joint action and, in particular, in the adoption of formal decisions that require consensus.

As we explained in our May 2023 Newsletter, at least three options are considered feasible to address the current problems faced by Mercosur. All three are possible, but their direct or indirect consequences could be very different.

A first option would be to recognise the obsolescence of Mercosur, and the country that deems it appropriate could achieve independence by denouncing the Constitutive Treaty, as provided for in Chapter V. This would be the equivalent of the "Brexit" option for the United Kingdom. This experience may prove that the costs of 'disintegration' for a given country may be even higher than those of 'integration', as was the case for the UK.

A second option would be to undertake the process of amendment of the fundamental ground rules and more specifically those of the Treaty of Asunción, in particular articles 1, 2 and 5, among others. This is an option with uncertain deadlines and results, which could have high and different political costs in each country, as it would require the approval of the respective parliaments. This could make this option inadvisable in the realpolitik of a given country.

A third option would be for the four Member States to agree on common policies and working methods aimed at making full use of the existing constitutional rules, without having to resort to their amendment and without prejudice to the possibility that it might even be desirable to push for new constitutional rules at a later stage. This would seem to be the more advisable option for any of the countries whose governments might have doubts about the cost of securing the parliamentary support that the second option would require.

We have pointed out that within the framework of this third option, an attempt could be made to introduce substantial improvements in Mercosur's objectives and functioning on at least three levels. These improvements would not necessarily require formal reforms of the Treaty of Asunción or the Ouro Preto Protocol.

A first level would be that of the methodology for the concertation of national interests, which is necessary to achieve the adoption by consensus of joint decisions by the Mercosur member countries, which can then have an effective impact on reality.

Specifically, this proposal seeks to strengthen in practice the functions of the so-called Administrative Secretariat, in particular with regard to the process of technical preparation and adoption of joint decisions requiring the consensus of all partners. Its aim would be to strengthen its capacity to facilitate, through its contributions and initiatives, the complex task of reconciling the interests and priorities of each partner in the adoption of Council decisions requiring consensus.

This would not involve opening a debate on possible supranational functions of the Mercosur Secretariat, which would mean that those who perform them would consider themselves above the respective national governments. It would mean granting the Secretariat the necessary technical capacity to facilitate the complex task of reconciling the different positions of the member countries, especially with regard to decisions that must be taken by consensus. Helping to build such consensus would then be a fundamental role of a strengthened Mercosur Secretariat.

This would also mean developing an active role for the Secretariat in the creation of networks of academic institutions and technical discussion, with the participation of experts from member countries as well as from international organizations active in the region, including ECLAC and INTAL.

In principle, the Mercosur Secretariat already has an organizational modality that would allow it to fulfill such a function. Strengthening its role in providing the experience, information and intelligence needed to coordinate the diversity of interests and visions of its member countries, and thus achieve the consensus necessary for the adoption of its decisions, is something valuable that can contribute to enhancing Mercosur's role in the productive development and international integration strategy of its member countries.

Other aspects mentioned in our May Newsletter require special analysis in order to be implemented. One of these is the sectoral agreements provided for in Article 5(d) of the Treaty of Asunción and regulated by Decision No. 3 of 1991. This must be addressed together with the instrument of partial scope agreements, provided for in the Treaty of Montevideo of 1980, which created LAIA, and linked to another relevant aspect of Mercosur's integration strategy, which is the joint action with the countries of the Pacific Alliance and other countries in the Latin American region.

A second level is the full inclusion in Mercosur's working agenda of issues that have recently become more relevant, particularly those related to climate change.

The above issues should be addressed in parallel with an ambitious strategy of trade negotiations with a wide range of developed and developing countries. Such a strategy should include, from the outset, the negotiation of so-called free trade agreements with the world's major markets (notably the US, China, India, South Africa, Australia and Japan) and the conclusion of the pending agreement with the EU.

As we recently pointed out in an article published in the Foreign Trade Supplement of the newspaper "La Nación", forty-three years after its creation, ALADI continues to be one of the most appropriate frameworks for the development of the processes of gradual construction of economic integration in Latin America. Since its creation in 1980, it has been considered a key institution for the development of an idea that is simultaneously relevant in the political, economic and social spheres, both in the region and in each of its member countries.

Its founding instrument, the Montevideo Treaty of 1980, covers issues relevant to the development of a common working strategy among the countries of the region. And it includes, in a special chapter, partial scope agreements that may be concluded with countries from other integration areas outside Latin America (Articles 26 and 27).

The concept of Partial Scope Agreements is perhaps the main contribution that the creation of LAIA has made to the regional economic integration strategy of its member countries. In our view, it was the most important outcome of the Acapulco meeting that led to the creation of LAIA. It is perhaps the one that most contrasts with the pre-existing reality of the previous phase of LAFTA, in which a central conceptual axis was that of the "free trade area".

Chapter II of the Treaty defines agreements of partial scope as those in which not all Member States participate. They create the conditions for deepening a regional integration process through a progressively multilateral scope. It adds that the rights and obligations established in them "shall apply exclusively to the Member States which sign or accede to them".

After establishing the general rules applicable to them (Article 9), reference is made to the different types of partial scope agreements according to their purpose ("commercial", "economic complementarity", "agricultural" and "trade promotion").

Finally, it is provided that rules for the conclusion of other agreements of partial scope, including those on scientific and technological cooperation, the promotion of tourism and the protection of the environment, may be laid down by means of appropriate regulations.

Two chapters of the Treaty give it an even broader scope, in the perspective of the current economic integration strategies of the LAIA member countries and, in particular, to strengthen the idea of gradually building a process of regional scope and global projection.

One of these (Chapter IV) refers to "convergence and cooperation with other Latin American countries and economic integration areas". The other (Chapter V) refers to "economic cooperation with other areas of economic integration outside Latin America".

These are two areas that are increasingly relevant to the current international integration strategies of the Latin American countries that are members of LAIA. This is particularly the case with regard to the development of their international integration strategies towards the Asian and African regions.

It should be added that Article 38 of the Treaty sets out in broad terms the functions that the member countries assign to the LAIA General Secretariat, currently headed by Sergio Abreu, who has had a long and distinguished career in his country, Uruguay, including the post of Foreign Affairs Minister. These functions are relevant to the appreciation of the growing role that the General Secretariat will have to play in the context of the current and, above all, future global international reality.


Recommended reading:


  • Heine, Jorge, "The Global South is on the rise -but what exactly is the Global South?, The Conversation Weekly, July 3, 2023.
  • Nino, Carlos, "Un País al Margen de la Ley. La anomia como componente del subdesarrollo argentino", Ediciones Siglo XXI, BsAs. April 2023.
  • Origlia, Gabriela, "Tras marchas y contramarchas, la Argentina debe definir si se suma al bloque de los BRICS", Foreign Trade Supplement. "La Nación" newspaper, December 28, 2023, pp. 4 and 5.
  • Peña, Félix, "La Argentina y el desarrollo de sus relaciones comerciales internacionales", article published in Revista de Relaciones Comerciales Internacionales, Universidad de La Plata, vol.32 - No. 65/2023 - 170.
  • Peña, Félix, "Por qué la ALADI es un convenio clave para la convergencia económica regional", Foreign Trade Supplement, La Nación newspaper, December 28, 2023, page 3.
  • Semán, Pablo (coordinador), "Está entre nosotros. ¿De dónde sale y hasta dónde puede llegar la extrema derecha que no vimos venir?, Ediciones Siglo XXI, BsAs December 2023.
  • Tertrais, Bruno, "La Guerre des Mondes. Le retour de la géopolitique et le choc des empires", Éditions de L'Observatoire, Paris, October 2023.

Félix Peña es Director del Instituto de Comercio Internacional de la Fundación ICBC; Director de la Maestría en Relaciones Comerciales Internacionales de la Universidad Nacional de Tres de Febrero (UNTREF); Miembro del Comité Ejecutivo del Consejo Argentino para las Relaciones Internacionales (CARI). Miembro del Brains Trust del Evian Group. Ampliar trayectoria.

http://www.felixpena.com.ar | info@felixpena.com.ar


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