| ALADI, UNASUR AND MERCOSUR:
Institutional building blocks of a region that faces its challenges?
by Félix Peña
English translation: Isabel Romero Carranza
Adapting its regional institutions to the context
of the new world reality and its challenges has become a priority for
the South American countries and for its Latin American partners. Within
this perspective, the role of the existing regional institutions, of which
Argentina and its South American partners are members, should be questioned,
especially their ability to work in an articulated manner in the area
of diagnostics and concrete proposals for action.
There are three existing regional institutions that
can be mentioned on this respect. Though not the only ones they are those
that, due to their scope of action, have the greatest potential for working
in an articulated manner. We are referring to the ALADI, UNASUR and Mercosur.
These are regional institutions with different aims, functions, geographical
scope and histories but which are complementary and may potentially benefit
each other. Some recent events seem to signal the beginning a new era
The political will to coordinate the strategies of
the countries of the region in order to navigate the new world reality,
face its challenges and take advantage of its opportunities, can be perceived.
Those three institutions have a key role to play on this regard. An articulation
of their activities that takes advantage of the recent appointment of
head officers with vast political experiences may help maximize the services
that they can provide to its member countries.
External circumstances that demand a clear need for
joint action among countries of the region; existing regional institutions
that may be put to good use; vastly experienced political personalities
in charge of them; diagnostic reports prepared by prestigious institutions:
everything indicates that the necessary elements for effective action
have been put into place.
These are times of strong international challenges that need to be assessed
and confronted. Within this perspective, the role of the existing regional
institutions, of which Argentina and its South American partners are members,
should be questioned, particularly if they are able to work in an articulated
manner in the area of diagnostics and concrete proposals for action. That
is, if they can become the building blocks of the joint institutional
effort aimed at finding effective answers to the challenges currently
being faced, effective because of their results and for contemplating
the different national interests at stake. It would indeed require that
each one of the member countries develops its own strategies for facing
the new global and regional realities. Without them, whatever is attempted
at the level of regional coordination might lack the adequate support.
Adapting the regional institutions to the new world reality and its challenges
is thus a priority for South American countries and for its Latin American
partners. This was made manifest by the recent UNASUR meetings held in
Buenos Aires, first by the Ministers of Economy and Finance and the Presidents
of the Central Banks and later by the Ministers of Foreign Affairs.
On this regard, three existing regional institutions deserve our attention.
Although not the only ones, due to their scope of action they have the
greatest potential for working in an articulated manner. We are referring
to the ALADI (Latin American Integration Association - LAIA), UNASUR (Union
of South American Nations) and Mercosur (Southern Common Market). Argentina
has a relevant influence in all of them. Within their own scope of action,
other institutions such as CEPAL (Economic Commission for Latin America
and the Caribbean - ECLAC), the CAF (Andean Development Corporation) and
the Andean Community of Nations -which is currently facing some difficulties
- could also play a relevant role. In fact the two former institutions
are proving this point.
In order to attempt to provide answers to the question that was raised
previously, we could start by acknowledging the fact that the world context
in which Argentina and the rest of the countries of the region are inserted
is undergoing structural changes. As we have pointed out in previous opportunities,
these changes are the result of a set of complex events which, if considered
individually, may not fully account for the new realities that are now
becoming so evident. For example, if we were to try to grasp them only
through the perspective of the financial crisis that has shaken the world
in recent years. In this sense, any attempt at deciphering the current
reality that sets aside the logic of power relations, either at a global,
regional or local scale, will most certainly lead to a misinterpretation
of what is essential in many of the relevant events that fill the daily
These changes we are referring to will probably require time to mature
and bring about their full effects. They will not show themselves in a
straightforward course. Even when it would seem fateful to mention it,
in the course of history -always a great teacher-, radical transformations
and wars have frequently been closely linked. In any case, the scope and
extent of their impact on the social and economic development of the countries
of the "neighborhood" in which we live -South America in particular
but Latin America as well- are still hard to fathom in all their extent.
They are becoming manifest in regards to the two simultaneous processes
that are becoming increasingly obvious at a global scale. In their interaction,
both have current and potential effects on the worldwide exchange of goods
and services. They also have an impact on international trade negotiations
-especially in the anemic Doha Round of the WTO- and in those related
with climate change, as well as in many other relevant issues of the global
agenda. Even when they are interconnected, these are processes that require
diagnostics and approaches that are differentiated and coordinated at
the same time.
One of such processes is that of the current financial and economic crisis
and its well known consequences in, among others, production and consumption
and in the international trade of goods and services. In the last three
years the crisis has impacted the employment levels and the morale of
people, relaying in some countries its effects onto the social and political.
It is a known fact that, depending on the intensity of such effects, an
international crisis can give rise to systemic problems that may affect
the political stability of the most vulnerable countries.
This, in turn, may produce a chain reaction in other countries, especially
those belonging to the same region. It is a process with very visible
immediate outcomes and that poses a strong demand for answers in the short
term - particularly at the national level, but also in the coordination
between countries at a global and regional level- precisely due to its
potential for social and political consequences.
The other process is that of the shifting of relative power between nations.
It is deeply rooted in history. It is a phenomenon that has accelerated
in the last twenty years. It is reflected by the emergence of new protagonists
-countries, companies, consumers, workers- with an influence on global
economic competition and also in international trade negotiations. However,
its full effects, even in the case of international security, will probably
become evident in the long term, at times through barely perceptible movements,
almost as if in slow motion.
We are thus in the presence of a global systemic crisis that recreates
the historical dialectic tension between order and anarchy in international
relations. It is made manifest by the inability of the institutions belonging
to the collapsing order to find efficient answers to the collective issues
being faced at a global scale. The true danger is that this gives rise
-as has happened in the past- to systemic problems within those countries
that have been and still are relevant actors in the international scenario.
These systemic crises can produce a domino effect in the different regional
spaces and, eventually, at a global scale. This might happen in the measure
that the citizens of the different countries, including the most developed
ones, lose trust not only in the markets but also in the ability to find
solutions within the framework of their democratic systems and thus become
"outraged". It is a more tangible risk in the case of some European
countries. If this were the case, the bleak forecasts of some analysts
could pale in comparison to what might be confronted in the future.
Within this world context, developing a climate of mutual trust between
the countries of the region and, at the same time, promoting a renewed
regional integration, especially one that enables to connect the economic
systems and encourage the proliferation of transnational production chains,
would seem to be two priority courses of action that the current circumstances
impose upon Latin America and, in particular, the South American space.
Both courses of action are interrelated: one feeds the other generating
a virtuous cycle between mutual trust and the density of the network of
cross interests of all kinds.
Such circumstances are the result of the effects of the global financial
and economic crisis on the region. However they are mostly the outcome
of the deep transformations that are taking place in the distribution
of world power, with their impact on global economic competition and on
international trade negotiations. They imply structural transformations
that are gradually generating a wide array of opportunities for each one
of the countries of the region, whatever their economic dimension or relative
power - both in terms of foreign trade as well as technical know-how and
productive investment flows-. At the same time, they can generate different
perspectives on how to profit from them and even with regards to the prevailing
interpretations on their real scope and impacts. From there the importance
of the climate of mutual trust among the countries of the region.
But if mutual trust is a necessary condition for regional governance,
there seems to be a consensus in that it is not enough to achieve the
rule of peace, democracy and political stability in the South American
This is the reason why a necessary second course of action would be to
encourage a renewed regional cooperation. This makes sense not only politically
but economically as well. If it is addressed with pragmatism it can result
in a denser network of multiple cross-interests that can support, at the
same time, the climate of mutual trust. Such network has among its key
players the companies that internationalize operations at a transnational
scale -especially by articulating productive chains- and which contribute
to the physical connectedness of the corresponding markets. However, it
is also sustained by networks in the most diverse fields, such as energy,
innovation, technology development, education and social solidarity. Much
can be learned from Asia on this regard. The webpage of the Asian Development
Bank (http://www.adb.org/), as well as that of its Institute (http://www.adbi.org/)
and its Center specializing in regional integration (http://aric.adb.org/)
provide access to relevant information on this regard.
In several of its most recent reports, ECLAC has insisted on the idea
that the driving force behind the construction of a renewed regional cooperation
involves building on what has already been achieved and benefiting from
what is available in terms of regional agreements and mechanisms. Under
the current situation more than overly ambitious and difficult to reach
goals, reality imposes the need to acknowledge differences and diversities,
even conceptual ones -using for such end a wide array of approaches of
variable geometry and multiple speeds-; of capitalizing on experiences
and assets provided by fifty years of regional integration experiences
-at times frustrating-, and of placing the stress on certain priority
issues related to physical and economic connectedness, with solidarity
in every aspect, and with granting preferential economic treatment compatible
with the commitments undertaken within the WTO. Concretely, the new world
context will demand a greater regional cooperation, both to control the
eventual effects of the financial and economic crisis and to develop an
assertive strategy for the insertion in world markets of all that the
countries have to offer in terms of competitive goods and services with
the greatest added value.
It is within this perspective that the articulation between ALADI, UNASUR
and Mercosur becomes so important. Even when they have different goals,
functions, geographical scope and even histories, these are complementary
regional institutions that may potentially benefit each other.
ALADI is the oldest one. It originated from a transformation of the ALALC
(Latin American Free Trade Association -LAFTA), created in 1960. At that
time, the government of President Arturo Frondizi had a key role in its
conception. It reflected a clear vision of the role of the region in the
development of Argentina. Both in the ALALC and now in the ALADI the emphasis
is placed on intra-regional trade with all its ramifications and implications,
even the political ones.
Among other relevant functions, ALADI enables to include trade preferences
between members without being necessary to extend them to third countries
within the frame of the obligations entered into in what is now the WTO-GATT.
However, it always sought more ambitious goals to encourage regional
integration. It is a noteworthy fact that it includes Mexico and Cuba
among its members.
UNASUR is the most recent creation. Its goals are wide-ranging and are
not limited to the economic but delve deep into the governance requirements
for peace and political stability of the geographic space. It is an organization
currently under construction and development.
At the same time Mercosur had, since it origins, an economic purport
that acquires its full meaning within the framework of wider social and
political objectives, deeply rooted in the bilateral strategic relation
crafted since the 80s between Argentina and Brazil. Aside from this, it
was conceived with a potential South American scope in mind and as a comprehensive
part of ALADI's institutional framework.
Some recent developments seem to reflect the intention of beginning a
new era in these three regional institutions. The first of these events
is the creation of UNASUR's South American Economy and Finance Council.
It first met last August in Buenos Aires (see the full text of the final
declaration by the Ministers of Economy and Finance and by the Presidents
of the Central Banks on issue number 67 of Veintitres Internacional magazine),
and it was then agreed -among other things- that the current international
scenario, characterized by the crisis of the main developed countries,
would be tackled in a coordinated and joint manner. A few days later,
UNASUR Ministers of Foreign Affairs, also gathered in Buenos Aires, endorsed
the idea of encouraging the use of local currencies in intraregional trade
and of reviewing the Agreement on Reciprocal Payments and Credits that
exists within the framework of ALADI. The second relevant event is the
political decision to designate, at the top of each one of the institutions,
personalities with vast experience in the public office of their own countries.
In UNASUR, María Emma Mejía, former Chancellor of Colombia,
was designated as Secretary General. In Mercosur, Ambassador Samuel Pinheiro
Guimarães, former Vice-chancellor and Secretary of Strategic Planning
during Lula's Presidency, was appointed High Representative-General. In
ALADI, Carlos Chacho Álvarez, once Vice-President of Argentina
and who performed duties as President of Mercosur's Permanent Representatives
Committee, was elected as Secretary General.
There seems to be thus a political will to coordinate the strategies
of the countries of the region in order to sail across the new world reality
while facing its challenges and profiting from its opportunities. The
three institutions mentioned above have a key role to play on this respect.
ALADI's new Secretary General raised this issue at the beginning of his
mandate and referred to the need of articulating the organization's activities
with those of other regional institutions.
An articulation of the functions that will be carried out by the three
high officers mentioned above would enable to improve the services that
these institutions can provide to their member countries. There are issues
that are present in the agendas of the three institutions such as, among
others: trade facilitation, physical and economic connectivity, use of
local currencies in reciprocal trade and payment mechanisms, productive
articulation with a strong participation of SMEs, economic asymmetries,
coordination of interregional negotiation strategies, and definition of
a new architecture of the global economic and financial system.
At the same time, ECLAC has just finished a diagnostic report on the
impact of the international reality on Latin American countries, including
an agenda of issues that require concerted action (see the reference to
this document in the Recommended Reading Section at the end of this Newsletter).
Some roadmaps may be extracted from this analysis to guide the concerted
actions required to face the current economic and financial crisis and,
in general, the new realities of world economic competition. These are
actions that fall within the domain and possible agendas of the three
institutions referred to above.
In conclusion: external circumstances that pose a clear need for concerted
action among countries of the region; existing regional institutions that
may be put to good use; vastly experienced political personalities in
charge of them; diagnostic reports prepared by prestigious institutions.
So, all indicates that the necessary elements have been gathered together
in order to encourage an effective coordination of all regional efforts.
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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