| A NEW STAGE OF MERCOSUR AND ITS RELATION
WITH THE EU?
The leadership and methodological intelligence requirements that arise.
by Félix Peña
English translation: Isabel Romero Carranza
It is in the context of the current international
system and its uncertainties that we need to place the issue of how to
continue the process of construction of Mercosur and the conclusion of
a bi-regional agreement between Mercosur and the European Union. Can it
be considered in this regard that both Mercosur and its negotiations with
the EU are entering a new stage? In this sense, there are clear signs
that the conditions are right for it to happen. In the case of the new
Argentine government, President Macri has clearly stated the importance
he attributes to the construction of Mercosur as the central axis of a
wider strategy for integration in Latin America and the world. In this
perspective, he assigns a special role to the deepening of the preferential
relation developed over the past thirty years with Brazil, later extended
to the wider Mercosur space and the other Latin American countries. He
has also been clear about the strategic importance of relations with other
regions. This perspective certainly includes the negotiations of the agreement
with the EU and those that will have to be undertaken in the hemispheric
space itself and with countries in other regions, among which an eventual
preferential trade agreement with China occupies a special place due to
its importance in trade and investments.
As for the construction of Mercosur, there are three
conditions that seem essential in order to move forward with political
realism and achieve concrete results. The first of them is to leave out
from the debate the issue of whether Mercosur should continue to exist
as it is or if it would be better to transform it into a free trade area
or simply eliminate it. The second is that an integration process does
not necessarily imply that the participating nations will lose their sovereignty
or no longer be autonomous units of the international system, nor that
the markets and national economic systems need to be completely merged.
And the third condition refers to the methodology for the opening of the
local markets to trade and investments originating in the partner countries.
Notwithstanding broader commitments, such as those originally agreed in
the Treaty of Asuncion on the trade of goods and the common external tariff,
individual sectoral approaches were also envisaged, such as that of the
automotive sector and the agreed ,even when not widely used, sectoral
agreements provided for in the Treaty and in Decision CMC03 / 91. This
regulatory framework has been scarcely employed and today could adapt
well to the need to facilitate productive integration in other sectors.
An intelligent adaptation of Mercosur to the new global
and regional realities and the challenges they pose will help ensure that
the negotiations with the EU continue along a more strategic and, at the
same time, pragmatic path.
In the relations between nations, the international context is a necessary
backdrop for understanding the constant tension between conflict, fragmentation
and even the threat of war on the one hand, and cooperation and the possibility
of integration, on the other hand. This has always been so and still holds
true today, particularly in the case of the relations between adjacent
nations given their greater physical connectivity.
In his book "Memorias" (Encuentro-CEU, Madrid 2010); Jean Monnet
describes well the role of such a backdrop at the beginning of the path
that led to the construction of what is now the European Union. At its
founding moment it had a fundamental influence in the perception of an
international scenario that risked repeating the experience, so often
lived in Europe, of violence and war in the relations between neighboring
nations, especially between Germany and France. Political leadership and
methodological and technical intelligence was the winning combination
that finally resulted in the Schumann Plan (May 1950), the offspring of
exceptional personalities such as were, among many others, Robert Schumann
and Konrad Adenauer at the political level, and Jean Monnet himself in
the strategic and more technical aspects.
The world today is very different from the fifties of last century. However,
like then, there are trends and deep forces at work at the global level
and in some of the regions, which lead to a climate of uncertainty and
pose challenges that are partly similar to those faced by the leaders
of that time. In this regard, it may be useful to read and reflect on
a recent article by Joschka Fischer, former Foreign Affairs Minister and
Vice-Chancellor of Germany, where he presents a tough but realistic analysis
of the current world situation. Published in the newspaper El País
of Madrid, it has a suggestive title: "Welcome
to the 21st Century. A new world order may seem inevitable buts its foundations
are still indiscernible" (http://elpais.com/).
He bluntly points out that: "Wherever one looks, chaos seems to be
ascendant. The international order forged in the fires of the twentieth
century seems to be disappearing, and we have not had even the faintest
glimpse of what will replace it." He mentions some of the main and
known challenges faced today by the community of nations and he adds a
pessimistic note on how these challenges will be addressed: "What
is not clear is the context in which the response will come - if at all.
In which political structures, by whose initiative, and under which rules
will these questions be negotiated - or, if negotiation proves impossible,
fought over? Political and economic order - particularly on a global scale
- does not simply arise from peaceful consensus or an unchallenged claim
by the most powerful. It has always been the result of a struggle for
domination - often brutal, bloody, and long - between or among rival powers.
Only through conflict are the new pillars, institutions, and players of
a new order established" (translated from the Spanish version).
This diagnosis helps understand the importance of the efforts aimed at
creating conditions for global governance that is functional to the goal
of world peace. One of such conditions is the prevalence of the logic
of cooperation and joint work between countries of the same geographic
region. Regional governance, understood as the result of values, institutions
and rules that ensure an environment of peace, security and political
stability among neighboring nations, is thus an increasingly valuable
public good and, at times, difficult to achieve and maintain.
It is in this context that we should place the issue of how to continue
building Mercosur and the conclusion of the bi-regional agreement with
the EU. Both are part of complex processes of integration into broader
regional and bi-regional spaces. And both are explained by a very dynamic
and multidimensional combination of political, economic, social and cultural
factors. Pretending to understand these processes and, especially, to
operate on them just from the perspective of trade or the economic, or
even the political, involves the risk of generating illusions that then
do not translate into reality. This has happened many times, especially
in the case of Mercosur.
Could it be considered in this regard that both Mercosur and its negotiations
with the EU are entering a new stage? In this sense, there are clear signs
that the conditions might be right for this to happen. They have been
present for some time in at least three of the Mercosur members (Brazil,
Paraguay and Uruguay). More recently, the signals given by the new Argentine
government indicate a strong political will to advance the development
of both processes and place them in the broader Latin American regional
integration frame, through the convergence of the countries of Mercosur
and those of the Pacific Alliance. It should be noted that the Alliance
countries have already concluded free trade agreements with the EU.
The newly elected Argentinean President, Mauricio Macri, has been clear
on the importance he attributes to the construction of Mercosur as the
central axis of a broader more active and assertive integration strategy
of the country in Latin America and in the world. In this perspective,
he assigns a special role to the continuation and deepening of the preferential
relation developed over the past thirty years with Brazil, later extended
to the wider Mercosur space and other Latin American countries. He has
also been clear about the strategic importance of relations with other
regions. This perspective includes, most certainly, the negotiations of
the agreement with the EU and those that will have to be undertaken in
the hemispheric space itself and with countries in other regions, among
which an eventual preferential trade agreement with China occupies a special
place due to its importance in trade and investments (on this topic, refer
to the January
2016 issue of this newsletter on http://www.felixpena.com.ar/).
With regard to Mercosur, it will be important to see if three of the
existing perceptions pervasive in member countries can be overcome. One
of such perceptions is outlined in the phrase "Mercosur binds us."
The other in the expression "the market that was assured was never
made available". And the third states that "the promised preference
was liquefied". The first perception refers to the fact that Mercosur
requires its members to negotiate together any tariff preferences with
other countries (combined effect of the common external tariff and CMC
Decision 32/00). The second perception is linked to restrictions of all
kinds that have continued to be applied to mutual trade by all member
countries (although the most notable case in recent years has been Argentina).
And the third perception points to the fact that sometimes member countries
have unilaterally extended trade preferences -not necessarily of the tariff
kind- to third countries; thus placing them on an equal footing with member
The clear signals sent by the government of President Macri of a real
interest in concluding the negotiations with the EU and of advancing the
convergence between Mercosur and the Pacific Alliance, but without ruling
out other subsequent trans-regional negotiation initiatives, would eliminate
the possibility of arguing that "Mercosur binds us." This was
a contention focused, correctly or incorrectly, on the perception that
Argentina was the main obstacle to trading with third countries and, in
particular, with the EU. As raised in two different articles by Ricardo
Lagos, former President of Chile, and Osvaldo Rosales, negotiator of free
trade agreements signed by Chile and Director of the International Trade
Division of ECLAC, an intelligent agreement between Mercosur and the EU
would open the door to renew the methodology of Latin American integration
itself due to its effects in the creation of an appropriate institutional
framework for the development of regional value chains aimed at the markets
of the region itself, but mainly of other regions (see the article by
Lagos on http://www.ricardolagos.org/.
The article by Rosales entitled "Chile and the relevance of the agreement
Mercosur-European Union" has not yet been published).
As for the construction of Mercosur, three conditions seem essential
in order to move forward with political realism and achieve concrete results.
The first of these conditions is to leave out from the debate the issue
of whether Mercosur should continue to exist as it is or if it would be
better to transform it into a free trade area or simply eliminate it.
It is an issue that often arises from ideological or theoretical perspectives,
the latter especially originating in a dogmatic interpretation of economic
theories (for example, what a customs union should be according to the
views of Bela Balassa, which leads to the distinction between the "perfect"
and the "imperfect". Mercosur is usually placed in the second
category, overlooking thus the scope of the definition of Article XXIV
of GATT). It would be wiser to emphasize, especially by the political
leadership, that what is under discussion is not whether the partners
should work together or not (that is, the existential dimension of Mercosur),
but how they can work together (that is, the methodological dimension).
In this regard, what is important to consider and make clear is that there
is no single model to determine how neighboring countries should cooperate
and work together and that in each case the methodology for joint work
should be adjusted to the needs and possibilities rather than to theoretical
models. It should also be adapted to the international commitments that
have been undertaken, especially in the WTO. (On the topic discussed in
this paragraph refer to the April
2012 issue of this newsletter on http://www.felixpena.com.ar/).
The second condition is that an integration process does not necessarily
imply that the participating nations will lose their sovereignty and will
no longer be autonomous units of the international system, nor that the
markets and national economic systems need to be fully merged. Neither
does it imply that there will be a final product within a specified period.
An integration process involves drawing a roadmap to gradually build more
connected and integrated economic areas through a process that will never
be linear, but that must have a reasonable degree of conclusiveness. It
implies, most importantly, that the participants voluntarily accept freely
agreed collective disciplines. This means the possibility of achieving,
through rules and institutions, a balance between national and common
interests as well as between a reasonable degree of flexibility in the
commitments and a necessary and also reasonable degree of predictability
in the agreed rules. Otherwise, the effects that are sought for productive
investment and job creation in terms of the expanded markets will not
And the third condition refers to the methodology for the opening of
markets to trade and investment originating in partner countries. Notwithstanding
broader commitments, as those originally agreed in the Treaty of Asuncion
regarding the trade of goods and the common external tariff, sectoral
approaches were always envisaged, such as that agreed and still in force
for the automotive sector, and the also agreed -but not widely used- sectoral
agreements provided for in Article 5.d of the Treaty and which had a first
regulatory framework in Decision CMC03 / 91. This regulatory framework
has been scarcely used and today could adapt well to the need to facilitate
productive integration in other sectors. In addition, it would help articulate
this sectoral productive integration with that which could be developed
in the context of the strategy of convergence in diversity, anticipated
for the relations between Mercosur and the Pacific Alliance. Plus a sectoral
strategy of this kind would not go against the broader idea of achieving,
over time, the so-called regional common market. On the contrary, it would
facilitate it. In this regard, the ALADI has the necessary tools that
derive from the rules laid down in the Treaty of Montevideo of 1980. How
to use the ALADI for the necessary articulation between the Pacific Alliance
and Mercosur is one of the issues that should be prioritized on the agenda
of the new stage of Mercosur.
The revitalization and adaptation of Mercosur and its instruments to
the new global and regional realities and the challenges they pose to
the countries of both regions will also help to ensure that the negotiations
for a bi-regional association with the EU follow a more strategic, as
well as pragmatic and intelligent, path. The implicit flexibilities of
Article XXIV, paragraph 8, of GATT allow such an approach (strategic and
pragmatic), provided it is the result of strong political leadership on
both sides of the Atlantic (which can only be driven at the highest level
of the respective member countries) and of an imaginative methodology
consistent with the rules of both integration processes and the WTO. (On
the leeway for action provided by GATT rules, especially Article XXIV
when properly interpreted, see Sangeeta Khorana, Nicholas Perdikis, May
T.Yeung and William A.Kerr, "Bilateral Trade Agreements in the Era
of Globalization. The EU and India in Search of Partnership", Edward
Elgar, Cheltenham UK-Northampton, MA. USA, 2010).
- Agamben, Giorgio, "Estado de Excepción", Adriana
Hidalgo Editora, Buenos Aires 2014.
- Andrews-Speed, Philip, "The Global Resource Nexus and its Relevance
to the Asia-Pacific Region", Institute of Strategic and International
Studies (ISIS), The APR Series E-Monograph, Malaysia 2015, en http://www.isis.org.my/.
- Capello, Mario; Cohen Arazi, Marcos, "En la búsqueda de
acuerdos y políticas de Estado para el desarrollo de largo plazo
en Argentina", IERAL-Fundación Mediterránea, Documento
de Trabajo, n° 147, 15-12-2015, en http://www.ieral.org/.
- Cohen, Craig; Dalton, Melissa G. (editors), "2016 - Global Forecast",
Center for Strategic & International Studies - CSIS, Washington
2015, en http://csis.org/.
- Denis, Jean-Pierre; Greilsamer, Laurent (editores), "El Atlas
de la Globalización. Todas las claves del proceso que está
cambiando el mundo", Carlos Alfieri, coordinador de la edición
Argentina; Le Monde - Le Monde Diplomatique - Capital Intelectual -
Fundación Mondiplo, Buenos Aires 2015.
- Hernández Requejo, William; Graham, John L., "Global Negotiation.
The New Rules", Palgrave Macmillan, New York 2014.
- Hernandez, Carolina, "The Asean Community Beyond 2015",
Institute of Strategic and International Studies (ISIS) Malaysia, Kuala
Lumpur 2016, en: http://www.isis.org.my/.
- Lagos, Ricardo, "¿Y si Europa nos lleva a nuestra integración",
"Clarín" 04-01-2016, en http://www.ricardolagos.org/.
- Melendez-Ortiz, Ricardo; Samans, Richard, , Executive Summary, Ross,
Alec, "The Industries of the Future", Simon & Schuster
eBook, New York 2016.
- Monroy-Hernández, Andrés, "Líneas de Ensamblaje
Digital", en Ideas, en "El País", 31-01-2016,
- Price, Alan H.; Brightbill, Timothy; Nance, Scott, "The Treatment
of China As A Non-Market Economy Country After 2016", Wiley Rein
LLP, Washington DC, September 15, 2015, en http://www.wileyrein.com/
y en http://www.wileyrein.com/.
- Riaboi, Jorge, "Glisofato: una disputa que puede costarle mucho
a la Argentina", en "El Cronista", 08-01-2016, en http://www.cronista.com/.
- Riaboi, Jorge, "El eterno amor político entre Europa y
el Mercosur", en "El Cronista", 29-01-2016, en http://www.cronista.com/.
- Rubio, Rafael, "La transición económica de China
y su impacto en América Latina: El caso del sector siderúrgico",
Boletín Informativo Techint 350, Buenos Aires, septiembre-diciembre
2015, en http://iosapp.boletintechint.com/.
- Schwab, Klaus, "The Fourth Industrial Revolution", World
Economic Forum, Geneva 2016.
- Scott, Robert E.; Jiang, Xiao, "Unilateral Grant of Market Economy
Status to China Would Put Millions of EU Jobs At Risk", Economic
Policy Institute, EPI Briefing Paper, 407, Washington DC, September
18, 2015, en http://www.iccspain.org/.
- Singh, Harsha V.; Meléndez-Ortiz, Ricardo; Samans, Richard;
Doherty, Sean, "Strengthening the Global Trade and Investment System
in the 21st Century", Executive Summary, Synthesis Report and Full
Report, The E15 Initiative, ICTSD - World Economic Forum, Geneva January
2016, en http://e15initiative.org/.
- Steger, Ulrich; Burgmans, Anthony, "Corporate Diplomacy. The
Strategy for a Volatile, Fragmented Business Environments", Wiley,
Chichester-West Sussex, 2003.
- Strategic Policy Forum, "Digital. Transformation of European
Industry and Enterprises", A report of the Strategic Policy Forum
en Digital Entrepreneurship, EU, DG Internal Market, Industry, Entrepreneurship
and SMEs, Brussels 2015, en http://www.digitaleurope.org.
- Trucco, Pablo Agustín (editor), "Socios en la integración
productiva. La estrategia asociativa de las empresas en el Mercosur",
Teseo-Flacso-LATN, Buenos Aires 2015.
- Valori, Giancarlo Elia, "Geostrategic forecast for the next ten
years", One Europe, Bruxelles, 02-08-2015, en http://one-europe.info/.
- Vasconcelos, Jorge, "Para despegar, la economía necesita
más exportabilidad", Revista Novedades Económicas,
IERAL-Fundación Mediterranea, N° 850, 18-01-2016, en http://www.ieral.org/.
- Vieira Vargas, Everton, "El Legado del Discurso. Brasilidad e
hispanidad en el pensamiento social brasileño y latinoamericano",
Editorial Biblos, Buenos Aires 2015.
- Williams Woolley, Anita, "Sabiduría en Grupo", en
Ideas, "El País", 31-01-2016, en http://tecnologia.elpais.com/.
- Wong, Dato' Steven CM, "ASEAN Post 2015: Together we build the
future", ASEAN Summit Roundtable 2016, Post-ASEAN Summit Roundtable
Forum "Forging Ahead Together", The National University of
Malaysia, Kuala Lumpur 13 January 2016, en http://www.isis.org.my/.
- World Bank Group, "Digital Dividends - World Development Report
2016", World Bank Group, Washington, DC., January 2016, en http://www-wds.worldbank.org/.
- Zambernardi, Lorenzo, "Politics is too important to be left to
political scientists: A critique of the theory-policy nexus in International
Relations", European Journal of International Relations, March
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