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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009

EFFECTIVENESS AND CREDIBILITY OF MERCOSUR
Some methodological shortcomings that affect the quality of its trajectory


by Félix Peña
January 2019

English translation: Isabel Romero Carranza


 

More than an existential crisis, Mercosur evinces serious difficulties related to the methodologies that have been used to advance its construction.

At the beginning of 2019 and after the inauguration of the government period of the new President of Brazil, it is timely to highlight some issues that are critical for modernizing Mercosur and for restoring an acceptable degree of credibility and effectiveness to it.

The first issue refers to the methodologies used for opening the markets and their ensuing impact on international trade negotiations. The second refers to the institutional methodology applied for the adoption of joint decisions, which also affect the development of the agenda of trade negotiations with other countries. And the third question refers to the methodology employed to ensure that the integration process is based and, therefore, guided by common ground rules.

Certainly, there are other important issues that would need to be addressed. However, the three mentioned above are those that, after almost thirty years of developing Mercosur, seem most relevant to keep in mind, especially in the conversations at the highest political level among the member countries.

Moreover, an intense approach would also be required in other relevant spheres, such as those of the institutions that represent the diverse social interests -particularly businesses- and of the specialists who can contribute with their ideas to guide the actions promoted by the political and social protagonists of the member countries.


Undoubtedly, the process of the construction of Mercosur is currently facing serious shortcomings. These do not seem to be linked to the idea of promoting an association for the joint work between member countries. More than an existential crisis what can be perceived therefore are serious difficulties related to the methodologies being used to advance its construction. This relates to the need for the future steps to be credible and effective and poses a great challenge for Mercosur today.

Future steps need to be credible in the sense that citizens and other countries, especially those who have to make productive investment decisions based on the markets expanded by the integration process -thus generating jobs and economic development-, can take seriously what the corresponding governments agree and later put into practice.

They need to be effective in the sense that the fact that what is agreed upon penetrates reality and contributes to achieve the objectives sought by the decisions that are made. The perception that the citizens of a country have -even when proven wrong in the end- about the effectiveness of an integration process can lead to situations such as those currently observed in the European Union with the so-called Brexit, where the population demands that their country withdraw from the integration agreement.

On several occasions we have pointed out what are, in our opinion, some of Mercosur's main methodological flaws (just to mention our most recent publications, see the newsletters of the months of January 2003; January 2014; September 2014; November 2014; May 2015; January 2016; August 2016; December 2016; May 2017; and November 2018).

At the beginning of 2019 and after the inauguration of the government period of the new President of Brazil, Jair Bolsonaro, it seems opportune to highlight three relevant issues to modernize Mercosur and to restore its credibility and effectiveness to a more acceptable degree.

The first issue refers to the methodologies used for opening the respective markets and their impact on international trade negotiations. The second refers to the institutional methodology that is applied for the adoption of joint decisions, which also affect the development of the agenda of trade negotiations with other countries. The third one refers to the methodology used to ensure that the integration process is based and, therefore guided, by common ground rules.

Certainly, there are other relevant issues to be addressed. But the three mentioned above are those that, after almost thirty years of developing Mercosur, would seem more important to consider, especially in the conversations at the highest political level.

The priority issue, which is perhaps the most highlighted today, refers to the debate on whether Mercosur should remain focused on the construction of a customs union or whether, on the contrary, it would be necessary to privilege the instrument of the free trade area, as has been done in the case of the Pacific Alliance.

This issue was addressed in a round table of experts, held on December 4 in Rio de Janeiro and organized by CINDES and CEBRI, on the subject "The role of the customs union in the future of Mercosur" ("O papel da uniâo aduaneira no futuro do Mercosul". For a free interpretation of what was discussed in this gathering, go to http://www.cindesbrasil.org/).

At the convening it was pointed out that the objective of the event was to promote the debate on the economic, political and legal impacts of the review of the role of the customs union in the Mercosur model. The meeting was moderated by two renowned Brazilian specialists, Sandra Rios and Pedro da Motta Veiga, and began with short presentations by Ambassador José Alfredo Graça Lima, Lúcia Maduro and Félix Peña (especially invited to the round table as Argentine expert).

In our presentation, at the beginning of the round table, we highlighted three aspects in an approach that combined, as befitting, political, economic and legal factors. Firstly, we mentioned that, in the case of Mercosur, leaving out the objective of a customs union would require an explicit modification of the Treaty of Asunción. The arguments for this were fully developed in the November 2014 issue of this newsletter and in our opinion are still valid today. From the perspective of the political analysis this means being clear about whether the governments of the member countries would be able to secure parliamentary approval of a modification of the Treaty of Asunción, which would be necessary in such a case. Secondly, we referred to the room to maneuver provided by the same Treaty for the definition, in the case of Mercosur, of the actual scope of the instrument of the customs union. If properly interpreted the leeway for action would be much wider than if the approach were made, for example, based on what the theory indicates that its scope should be and that, in practice, has often led to dogmatic views on the distinction between a "perfect" or "imperfect" customs union. Thirdly, we referred to the multiple approaches that would allow a flexible interpretation of the ground rules of an integration process such as Mercosur, which, if done correctly would not affect the credibility factor and, thus, the effectiveness of such rules.

The second priority issue refers to the institutional methodology required by an integration process -understood in the sense of joint work and with an intent of permanence of sovereign nations that aspire to remain so- to "produce" rules that are perceived as credible, potentially effective and legitimate.

From the founding times of the European integration process -what could be called the Robert Schumann-Jean Monnet moment- three central elements of the institutional methodology that was used in this case were clear. On the one hand, the value of the freely agreed ground rules. Secondly, the fact that such rules contribute to generate the main factor that sustains them over time and that is to engender "de facto solidarities", which help "bind" the respective political and economic national systems Thirdly the recognition that such ground rules need to be periodically adapted to the changes that occur in the realities (global, regional and national) in which the integration process is inserted.

The third priority issue refers to the political relevance of the fact that the process of generating and applying the ground rules is not left to the discretion of the member countries and especially of their governments. This implies recognizing the need to generate an instance of mediation that allows to harmonize the different national interests in contexts with great dynamics of change.

In the case of European integration, this need led to the design and continuous development of the so-called "community" institutions, in the sense of "common" rather than "supranational" institutions.

This institutional dimension is, perhaps, the one that has been most difficult for Mercosur to understand and develop, especially since an erroneous decision -adopted at mid-level of the diplomatic services accredited in Montevideo- led to undermine the action of the Secretariat, carried out under the Brazilian Reginaldo Arcuri, of providing an independent technical opinion on the state of Mercosur (2004). As a result, the first published report on its annual evolution was withdrawn from circulation. Never again was an independent technical evaluation produced by a Mercosur body.

The three mentioned issues need to be addressed at the highest political level of the member countries. But they also require an intense approach in other relevant spheres, such as those of the institutions that represent the diverse social interests and that of the experts who can contribute with their ideas to guide the actions promoted by the different political and social protagonists of the member countries.


Recommended Reading:


  • Araujo, Ernesto, "Now we do. Letter from Brasilia", "The New Criterion", Volume 37 Number 5, January 2019, en https://www.newcriterion.com/.
  • Banco Interamericano de Desarrollo (BID), "La revolución Agrotech en Argentina, Financiamiento Oportunidades y Desafíos", Coordinación M. Carmen Fernández Diez, BID 2018.
  • Barbosa, Rubens, "Rubens Barbosa: Desafíos internos y externos para o novo governo", "O Estado de S.Paulo", 30 Dezembro 2018, en https://economia.estadao.com.br/.
  • Cardoso, Fernando Henrique, "Novo ano, novos desafíos", "O Estado de S.Paulo", 6 de Janeiro 2019.
  • Elizondo, Marcelo, "Dos socios que deben dejar atrás la fatiga e iniciar una nueva etapa", "La Nación", 7 de enero 2019, en https://www.lanacion.com.ar/.
  • Friedman, Thomas L., "Estamos asistiendo al final de la Europa que conocemos?", "La Nación", 6 de enero 2019, en https://www.lanacion.com.ar/.
  • Motta Veiga, Pedro; Polónia Rios, Sandra, "O papel da uniao aduaneira no futuro do Mercosul", CINDES, Notas Cindes 01, Rio de Janeiro, Dezembro 2018, en http://www.cindesbrasil.org/.
  • Pagni, Carlos, "Brasil: cambio de "software", "El País", 8 de enero de 2019, en https://elpais.com/.

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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