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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
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MERCOSUR IN A WORLD OF LARGE ECONOMIC SPACES:
Keynotes introduced by President Mujica, useful to navigate into the future

by Félix Peña
July 2011

English translation: Isabel Romero Carranza


 

These are some of the questions that arise when considering the fact that the South American regional space combines conditions of significant economic dimension and a sufficient critical mass of power - at least potentially - and that two countries of this region, Argentina and Brazil, are participating in the G20 which has aspirations to become a relevant institutional nucleus in the construction of a new world economic architecture. But, above all, given the fact that what led to Mercosur's foundation was, precisely, the strategic idea of creating, through incremental steps, a common economic space open to other South American countries.

Mercosur's biannual Presidential Summits provide the opportunity to infuse new energies and guidance to the process of building a regional space of South American scope. The President of the country that holds the semiannual pro-tempore presidency of Mercosur plays a relevant role in all this.

What transcended of the reflections that President Jose Mujica expressed before his colleagues when assuming the pro-tempore presidency at the recent Asuncion Summit provides a vision of the keynotes which will be the focus of his temporary role during this semester. As per our interpretation, such keynotes refer to the need for a future strategic plan in alignment with the new world realities, to a greater efficacy of the institutions and to the development of the concept of "digital democracy", perhaps a leap to Mercosur 2.0 involving new forms of civic participation.


The trend towards a world of large interconnected economic spaces is being accentuated by the transformations that have taken place in the international scenario over the last years. This is introducing gradual but significant changes in the map of world economic competition. It will probably do likewise in the institutional architecture of the global economic order of the future.

Due to its relative economic dimension, such spaces could set into motion a sufficient critical mass of power so as to have a greater incidence in the definition of the ground rules of international economic relations and in the mechanisms of the main global multilateral institutions. In such case, they could act as "rule makers" in the system of world trade, considered in its broader sense as the result of the transnational flow of goods, services, technologies and investments.

Several of these economic spaces are currently represented by individual countries of continental dimensions and everything indicates that they will continue to do so. In fact, towards the year 2050 three major economic spaces could add up to approximately 66% of the world's gross product (at PPP). These countries are China, the US and India (in that order and with a marked distance between China and the other two). They represented 51.8% of the world's GDP in 2010. The following four countries (Brazil, Mexico, Russia and Indonesia) would add up only to 13.7% of the total, whereas Germany and the UK would each represent 2.1%. (These figures are based on data from the IMF with projections by the authors and presented by Uri Dadush and William Shaw on page 3 of a recently published book allusively entitled "Juggernaut"; see the reference under Recommended Readings).

In turn, other major economic spaces could be the result of geographic regions organized in groups of countries. In such case, institutionalization could enable them to express themselves under one voice, particularly in many relevant issues pertaining to world economic competition. Possibly, this would be the uttermost manifestation of the political and economic event involving a group of sovereign nations that belong to a given geographical space and that freely decide to build throughout time -and with modalities and methodologies that can differ greatly in each case- an institutionalized region in which they share markets, resources and strategies. This would express itself in a construct with which citizens could identify themselves, giving birth to the idea of "us" and "them" that is a key element for social validation and for the sustainability of this kind of joint regional undertaking.

This is the case of the European Union -at least until today-. In fact this is, for the moment being, the only organized geographic region that has a relevant economic dimension. As long as it can continue to express itself as a merger of countries that preserve their respective sovereignties while working in association, it will be possible to foresee that the European regional space will continue to be a relevant actor in the world economic scenario of the next decades. However, the current crisis of its integration process - is it just a crisis of the Euro? Is it a governance crisis as well? Or worse yet, is it an identity and social legitimacy crisis of the very idea of an institutionalized region? - poses some serious doubts on its future role as a large organized economic space, at least equivalent in magnitude and relevance to each one of the three countries mentioned above. The fact that not all the citizens of the EU member countries consider that Greece's troubles (or, for that matter, the troubles of any other member country with strong financial difficulties) are "their problem" may be revealing an existential crisis of deeper consequences.

Yet, in the future, this could be the case of other geographical regions of great dimensions such as, for example, Southeast Asia, Northern and Sub-Saharan Africa and the Middle East. Indeed, it could become the case of South America as well.

At present, however, it could be difficult to foresee when it will be possible for these other geographical spaces to be able to express themselves under one single voice, with all that this implies in terms of density and sustainability in the construction of a region. It would not seem sufficient to grant to the larger countries of the corresponding regional space the attribution of speaking on behalf of the other countries that form part of it -or that they self-arrogate this role themselves. Currently, for example, neither Brazil nor Argentina in South America, nor South Africa in Sub-Saharan Africa, nor Saudi Arabia or Turkey in the Middle East, nor Indonesia in South East Asia could aspire to reflect per-se, formally and systematically within the frame of the G20, the points of view and expectations of the other countries of their respective regions. Neither can this be done individually by Germany, France, Italy or the UK in Europe. This is the reason why the European Union also participates in the G20.

In the specific case of Mercosur, the following questions come into consideration: Will it be perceived in the future as a regional economic space that expresses itself under one single voice, at least in the relevant issues of the international economic agenda, including international trade negotiations?, and will it be able as well to reflect the interests of a broader South American regional space if the announced addition of Bolivia, Ecuador and eventually Colombia as full members were to take place, aside from concluding the pending incorporation of Venezuela?

These are just some of the questions that can arise given the fact that, on the one hand, the South American regional space complies with the requisites of having a great economic dimension and a significant critical mass of power -at least potentially- and, on the other hand, that two countries from this geographic region -Argentina and Brazil- currently form part of the G20, which aspires to become a relevant institutional nucleus in the construction of a new world economic architecture. But, above all, given the fact that what was agreed when it was founded was precisely to create, through incremental steps, a common economic space open to the participation of other South American countries.

Mercosur's semiannual Presidential Summits provide an opportunity to search for answers to all of these questions at the highest political level. It is befitting precisely of the Summits to contribute with new energies and directions to the process of building a regional space of South American scope. To renew the necessary political drive, to symbolize the strategic value of the common project and to provide an environment for the sincere dialogue at the highest political level are three of the functions to be expected from these system of Presidential Summits. It may even be said that, in a way, these are the purposes that justify its existence.

In this sense, the last Summit held recently in Asuncion has proved an occasion to confer political drive to the beginning of the process that should lead to the addition of Bolivia and Ecuador as new members. In this way they would be joining Venezuela, once the formalization for its membership is concluded, since the approval of the Caracas Protocol by the Paraguayan Congress is still pending. In turn, Chile has a special relation with Mercosur that involves a strong degree of economic integration. In addition, the eventual incorporation of Colombia has been considered as well.

The President of the country that holds the semiannual pro-tempore presidency plays a relevant role in sustaining the political drive necessary for the construction of the regional space of Mercosur. In this second semester of the year, the President of Uruguay has the opportunity to propose initiatives that may aspire to achieve the consensus of the other member countries and subsequently have an impact on reality.

These may be initiatives related with the agenda of priorities that Mercosur may have each semester. Currently these are, among others, to perfect the customs union, to deal with asymmetries, and to address productive integration and foreign trade negotiations (on this regard, see the joint communiqué by the presidents of the member countries and the minutes of the meeting of the Common Market Council on www.mercosur.int).

These can also be initiatives aimed at introducing approaches that seek to renew the process of integration by adapting it to the new global and regional realities.

What transcended from the thoughts expressed by President Jose Mujica to his colleagues at the recent Asuncion Summit enables us to envision certain keynotes which could become the focus of his work in his temporary appointment during this semester (for the ideas of the President of Uruguay go to http://www.presidencia.gub.uy/).

From our interpretation of what was expressed by Mujica it would be possible to outline three keynotes that, without exclusion of others, stand out due to their potential significance.

The first keynote refers to the need to interpret "the times we are living in and where we are headed for". It implies the development at the Mercosur scale of some efforts aimed at "decoding" the world around us and understanding the effects of the intense forces that shape it, all this within the perspective of the region.

This would require engaging in the preparation of a joint assessment of the opportunities and challenges that certain trends of the international scenario may pose for our countries. Energy and food, creativity, technical progress and innovation, and consumption and production capabilities are some of the key issues that could feed a joint strategic agenda of the Mercosur countries in a world of large interconnected economic spaces and with strong shifts in relative economic power and in the abilities to compete at a global scale.

The installed capacity of the partner countries to make assessments that help understand the international reality from a perspective of the Mercosur region is vast and may be articulated in a network of competitive intelligence. An example of this may be what the IPEA (Institute for Applied Economic Research) is in Brazil.

A second keynote refers to the institutional aspect. It has multiple possible unfoldings, among others those aimed at investing the work methods used in Mercosur with greater rationality, effectiveness and efficiency.

Yet, a preemptive aspect in view of what was discussed before would be precisely to be able to advance the capacity of the partners to express themselves under one single voice in those relevant issues of Mercosur's foreign agenda. It will require an answer to the following question: Who and why could speak on behalf of all the partners? Both the Doha Round -and obviously the WTO- and the G20 are the appropriate ambits to move forward in a previously agreed conjoint expression of the Mercosur members. This would seem even more relevant precisely if the addition of new member countries were to take place.

The third keynote, and possibly the most challenging, is the idea of moving forward towards modalities of "digital democracy". In that sense, proposals aimed at a Mercosur 2.0, with a strong emphasis on transparency and the actual access to relevant information for citizens would help increase the credibility and social legitimacy of the integration process,

A significant breakthrough could take place in relation to the informative quality of the web pages of Mercosur's bodies. Considering the present situation, some substantial progress could be made in terms of the information included in them and also with regards to their interactive quality.

At one point, Uruguay promoted the initiative called Somos Mercosur (in English We Are Mercosur, see http://www.somosmercosur.net/). Perhaps it could now be furthered in the direction of the concept of "digital democracy". This would include all the relevant information, even that of economic scope, so that the citizens of the member countries are able to follow closely the construction of the regional space in all those aspects that, in one way or the other, may affect their daily lives, be it as citizens, workers, entrepreneurs consumers or in any other aspect of the social activity.

In this sense, a main focus could be related to the multiple unfolding of the current and potential impacts of Mercosur and its instruments on the creation of productive employment.


Recommended Reading:


  • Acharya, Amitav, "Regional Worlds in a Post-Hegemonic Era", Spirit Working Papers, June 2009, on http://www.centredurkheim.fr/.
  • Angell, Norman, "The Great Illusion", Cosimo Classics, New York 2007.
  • Dadush, Uri; Shaw, William, "Juggernaut. How Emerging Markets are Reshaping Globalization", Carnegie Endowment for International Peace, Washington DC. 2011.
  • Guérot, Ulrike; Leonard, Mark, "The New German Question: How Europe Can Get the Germany it Needs", European Council on Foreign Relations, Policy Brief, ECFR 30, April 2011, on http://www.ecfr.eu/.
  • Kissinger, Henry, "On China", The Penguin Press, New York 2011.
  • Mallo, Tomás; Sanahuja, José Antonio, "Las Relaciones de la Unión Europea con América Latina y el Caribe", Fundación Carolina-Siglo XXI, Madrid 2011.
  • Mills, Greg, "Why Africa is Poor. And what Africans can do about it", Penguin Books, Johannesburg 2010.
  • Nye, Joseph, "The Future of Power", Public Affairs, New York 2011.
  • Pereira, Carlos; de Castro Neves, João Augusto, "Brazil and China: South-South Parnership or North-South Competition"?, Foreign Policy at Brookings, Policy Paper, Number 26, Washington, March 2011, on http://usp-br.academia.edu/.
  • Ratton, Michelle, "Os Acordos Regionais e Preferenciais de Comércio da India e da China", IPEA, Nota Técnica N° 2, Brasilia, April 2011, on http://www.ipea.gov.br/
  • Riggirozzi, Pía, "Region, regionness and regionalism in Latin America: Towards a new synthesis", LATN, Red Latinoamericana de Política Comercial, Working Paper 130, April 2010, on http://www.latn.org.ar/.
  • Roy, Joaquín¸ Lorca-Susino, María (eds.), "Spain in the European Union: the First Twenty-Five Years (1986-2011)", The Miami-Florida European Union Center of Excellence and the Jean Monnet Chair, University of Miami, Miami 2011.
  • Ruggie, John Gerard, "Constructing the World Polity. Essays on International Institutionalization", The New International Relations Series, Routledge, London-New York 2006.
  • SELA, "Las Relaciones de América Latina y el Caribe con África: Situación actual y áreas de oportunidad", Secretaría Permanente del SELA, SP/Di N° 07-11, Caracas, June 2011.
  • Serbin, Andrés, "Chávez, Venezuela y la Reconfiguración Política de América Latina y el Caribe", Colección El Estado de la Democracia, Siglo XXI-Plataforma Democrática, Buenos Aires 2010.
  • Serbin, Andrés (coord.), "De la ONU al ALBA: Prevención de conflictos y espacios de participación ciudadana", Colección Pensamiento Propio, CRIES-Icaria Editorial, Buenos Aires 2011.
  • Thorstensen, Vera, "Perfil da Política e dos Instrumentos de Comércio Internacional dos BICS (Brasil, India e China", IPEA, Nota Técnica N° 3, Brasilia, April 2011, on http://www.ipea.gov.br/
  • Van Langenhove, Luk, "The EU as a Global Actor in a Multipolar World and Multilateral 2.0 Environment", Egmont Paper 36, Egmont-Royal Institute for International Relations, Brussels, March 2010, on http://www.egmontinstitute.be/.
  • Van Langenhove, Luk, "Building Regions. The Regionalization of the World Order", The International Political Economy of New Regionalism Series, Ashgate, Farnham-Surrey 2011.
  • WTO, "Trade Policy Review: European Union", Tenth review of the trade policies and practices of the European Union, Geneva, 6 and 8 July 2011, on http://www.wto.org/.
  • Xuetong, Yan, "Ancient Chinese Thought, Modern Chinese Power", Princeton University Press, Princeton-Oxford 2011.


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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