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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
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ARGENTINA'S PRO-TEMPORE PRESIDENCY OF MERCOSUR:
What added value can be expected during the first semester of 2010?

by Félix Peña
February 2010

English translation: Isabel Romero Carranza


 

What added value in the construction of Mercosur can result from this semester in which Argentina -as the Pro-tempore President-could play a leading role in the joint work between the partners, particularly considering the deep changes that are taking place simultaneously at the global and regional planes?

A multidimensional, complex and dynamic integration process demands a periodical thrust at the highest political level. The coordination of this process is precisely the main responsibility of the country that holds the temporary presidency of Mercosur and of its multiple inter-governmental component bodies.

At least three sets of priorities characterize the agenda of Mercosur during this semester of Argentine presidency. The first is related to the progress in relevant matters that have remained pending from previous periods. The second arises from those issues that Argentina could propose as President of Mercosur, or those that are set forth by other members. The third priority results from the fact that the LAC-EU Summit will take place in the month of May in Madrid.

In order to achieve at least some substantial progress in the relations between Mercosur and the European Union, as part of a more encompassing and diversified strategy of international insertion of its member countries, would seem a main priority of the period of the Argentine presidency of Mercosur. This would have a positive effect on the country's image in terms of its ability to contribute a constructive leadership in the South American space. It would also benefit its image in terms of its predisposition towards generating inter-regional cooperation spaces -in this case with Europe- that are functional to its own strategic interests, without overlooking the legitimate interests of the productive sectors. Additionally it would contribute an appropriate framework to stimulate creative answers for other unresolved entanglements in the construction of Mercosur and even in the bilateral relations between Mercosur and European countries.


It is Argentina's turn to hold the pro-tempore presidency of Mercosur during the first semester of this year. A central question arises on this regard: What is the benefit for the construction of Mercosur that can result from this semester in which Argentina can have a leading role in the joint work between countries, particularly taking into account the changes that are taking place at the regional and global planes?

Whatever happens until the end of June, when the periodical Mercosur Summit takes place, will certainly not depend only of Argentina. It is clear that the construction of a regional integration space is a collective task that can be nurtured by the contributions made by each partner in view of their own national interests. Working together might then be decisive in order to define the eventual achievements that are accomplished during this period. In this sense, the future Chancellor of the newly elected Uruguayan government has advanced his country's disposition for promoting initiatives that facilitate the necessary adaptation of Mercosur to the new regional and global realities. However, by exercising the pro-tempore presidency, Argentina has even a greater chance of providing the political thrust that is needed to move forward and, most significantly, to resolve any existing entanglements.

The Treaty of Asuncion established that the participation of the Presidents in Council meetings would take place "at least once a year" (Article 11). However, it was precisely the need to ensure a continuous flow of political support at the highest level that led, as soon as the Treaty was signed, to contemplate that after each semester the work developed by the several competent instances through numerous meetings, sometimes weekly ones, should end with a Presidential Summit within the framework of the Mercosur Council. This has been the procedure since then and later was formally established by Article 6 of the Ouro Preto Protocol of 1994. An influence in the idea of the semiannual frequency was the experience of the preceding period of bilateral integration between Argentina and Brazil (1985-1990), during which the biannual presidential meetings were key to upholding the original political drive. Certainly, the precedent that existed in the European regional space was influential as well.

An integration process which is multidimensional (not limited to the commercial aspects), complex (the interests of the countries not always concur and there are deep asymmetries), and dynamic (the contexts at the national, regional and global planes are changing continuously), requires a periodical boost at the highest political level. Its coordination is precisely the main responsibility of the country that holds the temporary presidency of Mercosur and of its multiple intergovernmental component bodies. This becomes of particular relevance in the case of those bodies that have the competency to plan roadmaps and concrete commitments, following the mandates originated in the semiannual presidential meetings or through their own initiative. We are referring to the Common Market Group and the periodical Meeting of Ministers of Economy and Central Bank Presidents.

The periods of greater progress in the construction of Mercosur in it's almost 20 years of existence, prove the effectiveness of the dynamics that develops between the highest political level of each country and the two mentioned bodies during the course of each semester. Such dynamic, in the measure that it actually develops, can lead the semiannual meeting between the Council and the Presidents to produce roadmaps and decisions that allow moving forward with the integration process.

Given the low institutional profile that has been granted to the figure of the Secretary of Mercosur, it is precisely in relation to such dynamics of commitment building that the country that holds the pro-tempore presidency can have a wide margin to influence, with its initiatives, the results that are obtained at the end of the semester. The fact that no relevant competencies have been granted to the Secretary increases the responsibility of the country holding the pro-tempore presidency to attempt to finalize the period with a clear added value for the construction of Mercosur.

At least three sets of priorities characterize the agenda of Mercosur during this semester of Argentine presidency.

The first is related to the progress in significant matters that have been left unresolved from previous periods. The most important of these are outlined in the results of the last meeting of the Mercosur Council, which took place under the Uruguayan presidency, in Montevideo, in December 2009, (on this subject please refer to http://www.mercosur.int/, that includes the Joint Declaration of the Presidents of the member countries). Some of these issues have been on the agenda for quite some time. Without overlooking others, we can mention the most relevant which are: addressing the existing asymmetries; institutional consolidation; the approval of the Mercosur Customs Code; the elimination of the double charge of the external common tariff; the mechanism for the distribution of customs revenue; and the promotion of productive integration. Experience has shown that it is not easy to achieve the necessary consensus regarding these issues or to translate them into reality.

The second priority arises from those issues that Argentina, as the country holding the presidency, will propose for consideration and eventually for approval at the Council Meeting to be held in June and at the simultaneous Presidential Summit. On this plane, there is ample room for the initiatives that may be proposed also by other member countries -such the case of Uruguay, as previously mentioned- as well as by the productive sectors. These will become more effective in the measure that they result from the interaction between counterparts in the different Mercosur countries, especially within the network of business institutions. An example of a proposal originating in the business sector and that could translate into joint initiatives of companies with investments in several of the countries of the region can be found in a recent article by Gustavo Grobocopatel entitled "Mercosur is the sure path towards our progress". (See the text of this article in Clarín newspaper of Monday 15 December 2009, page 31 on http://www.clarin.com/). From the perspective of a businessperson who runs operations in various countries of the region, he helps make manifest the importance of a joint economic space -to which Chile is closely linked as well- for the future development of its member countries, especially when taking into account the new international realities. In the article he affirms, "In times of struggle between the global and the local, the regional option is inevitable and beneficial." He later adds, "We should build a common agenda for growth, integration and improved negotiation".

The third priority is related to the fact that the LAC-EU Summit will take place during the month of May in Madrid (on this regard see the December 2009 edition of our Newsletter on www.felixpena.com.ar). Argentina and Spain -the country that holds the European temporary presidency -have an opportunity and a key responsibility to obtain on such occasion substantial progress in the pending negotiation of a cooperation agreement between Mercosur and the European Union. Due to its bandwagon effect and to its political and economical impact, we may consider that this issue will probably define the image of the Argentine period of Mercosur. Both the Spanish and Argentine governments have given out clear signs of their interest and willingness to achieve at least substantial progress in such occasion. Likewise, the Brazilian Chancellor and the future Chancellor of the new Uruguayan government have expressed similar intentions.

There are complicated entanglements that will be difficult, but not impossible, to resolve in order to achieve such objective. These entanglements are to account for the collapse of the negotiations in October 2004 (on this matter refer to the April, May, June and July 2004 editions of our Newsletter on www.felixpena.com.ar). However, the context has significantly changed since then. Presently, there would seem to be more possibilities for introducing flexibilities, especially in relation to sensitive matters in the planes of both agricultural and industrial products. This will require ingenuity and technical creativity as well as purpose and political drive, such as was pointed out at the Mercosur-EU Business Forum (MEBF) Meeting with the Presidents of Mercosur countries, held in Montevideo. On this occasion, the MEBF members offered their collaboration. It would be advisable to take full advantage of it. (For the full text of the declaration, see http://www.mebforum.org).

On the technical front, there are mechanisms that are compatible with the WTO regulations to resolve the most critical pending problems thanks to the flexibility of Article XXIV of GATT-1994, without necessarily generating precedents that are inconvenient for the other international trade negotiations of both blocs. "Multi-speed" and "variable geometry" instruments will allow to face the most sensitive entanglements. The existing asymmetries between both regions and, especially, within Mercosur itself require of their use. Additionally, the inclusion of "evolutionary clauses" will allow to introduce progressive modifications to the preferences that are granted initially once the Doha Round, also behind schedule, is concluded.

It is in the political plane that actions are needed in order to make the eventual technical solutions that lead to the Mercosur-EU bi-regional agreement feasible. This leads to the central question: Are both regions really interested in concluding an association agreement which, without fully adjusting to the original idea nor to what would be advisable according to a "textbook criteria", would allow to take a quantitative leap in the transatlantic relations and would have a strong impact on the international image of both Mercosur and the European Union?

The answer to such question demands that the relations between both regions be analyzed within the broader scope of the issues that rule the agenda of global governance -among which those that were discussed at the Copenhagen Summit regarding climate change are a clear example, (on the subject see our January 2010 Newsletter on www.felixpena.com.ar).

However, it also requires considering the fact that new players currently have a growing presence in the South American space -such the case of China. This is not a fact that escapes the attention of European businessmen, particularly in relation to the future of industrial sectors in which they have a significant presence in Mercosur countries -such as the automotive sector, among others; or regarding the future international competition to participate with equipment, services and investments in the development of the huge potential of Mercosur countries -in particular, but not limited to, Brazil- for the production of food and hydrocarbons.

If the answer to the question posed above were affirmative -and there are many arguments in favor of this-, a main priority of the period of the Argentine presidency would be to achieve at least some substantial progress in the relations between Mercosur and the European Union, as part of a more encompassing and diversified strategy for the international insertion of its member countries. Eventually, the negotiating process could end in the following semester, during the period of the Brazilian presidency of Mercosur.

This would have a positive effect on our country's image in terms of its ability to contribute a constructive leadership in the South American space, particularly together with Brazil, Chile and Uruguay. It would also benefit its image in regards to its disposition to generate inter-regional cooperation spaces -in this case with Europe, but at a later date with other big players of world trade- that are functional to its strategic interests, without overlooking the legitimate interests of the productive sectors. In addition, this would provide an appropriate background to encourage creative solutions for other unresolved entanglements in the construction of Mercosur and even in the bilateral relations between the European and Mercosur countries.

This would seem more than necessary if it were true that none of the partners, not even the one with the largest relative economic weight such as Brazil, seem to have a credible alternative plan aside from the current Mercosur. At least this seems to be the case if we include in our analysis considerations other than the economic and commercial ones, such as those of strategic nature that involve the peace and stability of the South American regional space.


Recommended Reading:

  • DeShazo, Peter, "Outlook for Indigenous Politics in the Andean Region", A Report of the CSIS Americas Program, Center for Strategic & International Studies (CSIS), Washington December 2009, en http://csis.org/ o download here .
  • Foxley, Alejandro, "Market versus State. Postcrisis Economics in Latin America", Carnegie Endowment for International Peace, Washington 2010, en http://www.CarnegieEndowment.org/pubs.
  • Gnesotto, Nicole and Grevi, Giovanni (dir.), "The New Global Puzzle. What World for the EU in 2025?", Institute for Security Studies - European Union, Paris 2006, en http://www.iss.europa.eu/ or download here.
  • González, Felipe, "Qué podemos hacer juntos", Revista La Factoría, nº 45, Enero-Febrero del 2010, en http://www.revistalafactoria.eu/.
  • Le Monde Diplomatique, "El Atlas III. Un mundo al revés. De la hegemonía occidental al policentrismo", Edición Cono Sur, Capital Intelectual, Buenos Aires 2009.
  • Milov, Vladimir, "Russia and the West. The Energy Factor", Center for Strategic and International Studies - CSIS - IFRI, Washington-Paris, July 2008, en http://beta.csis.org/ or download here .
  • Narvaja de Arnoux, Elvira, "El discurso latinoamericano de Hugo Chávez", Editorial Biblos, Buenos Aires 2008.
  • Rojas, Rafael, "Las Repúblicas de Aire. Utopía y Desencanto en la Revolución de Hispanoamérica", Taurus, Buenos Aires 2010.
  • Rüland, Jürgen; Schubert, Gunter; Schucher, Günter, and Storz, Cornelia, "Asian-European Relations. Building blocks for global governance?", Routledge Contemporary Asia Series, Abingdon - New York 2008.
  • Schapiro, Jeremy; Witney, Nick, "Towards a Post-American Europe: A Power Audit of EU-US Relations", European Council on Foreign Relations, ECFR-EU, London 2009, en http://ecfr.3cdn.net/ or download here .
  • Woods, Ngaire, "Power Shift: Do we need better global economic institutions?", Institute for Public Policy Research (IPPR), London 2007, en http://www.ippr.org.uk/.

Félix Peña Director of the Institute of International Trade at the ICBC Foundation. Director of the Masters Degree in International Trade Relations at Tres de Febrero National University (UNTREF). Member of the Executive Committee of the Argentine Council for International Relations (CARI). Member of the Evian Group Brains Trust. More information.

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


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