REGIONAL COOPERATION FOR A BETTER INSERTION IN THE WORLD
The potential of the MAP Group and its effects on the integration of Latin
by Félix Peña
English translation: Isabel Romero Carranza
Currently, the global scenario offers an array of
simultaneous options for the insertion of a country in the world. One
of the factors contributing to this is the growth of the urban middle
classes in emerging countries, especially in Asia. This means a significant
growth of consumers of middle-class income, empowered by their access
to information and, therefore, who are aware of the multiple options available
to them when selecting goods and services adapted to their needs, values,
tastes and preferences. Added to this is the effect of the greater degree
of connectivity between the different markets, as a result, among other
factors, of the shortening of physical distances, the development of digital
commerce and the proliferation of transnational value chains.
In a global scenario where there is a prevalence of actors that have
access to multiple options (such as countries, citizens, companies and
consumers), those who aspire to compete cannot ignore the question of
how to adapt their strategy of international insertion to a reality in
which competition for world markets will be increasingly dynamic. Therefore,
it will be difficult to presuppose that the access to the demand for the
goods and services that are offered can be guaranteed. Moreover, the shifts
in competitive advantages will no longer be just the result of technological
changes or the effects of public policies. Increasingly, these will hinge
on the decisions of a huge number of consumers scattered in diverse markets
and, therefore, with multiple options at their fingertips.
In the perspective outlined above, it is worth considering the idea of
a convergence between two groups of Latin American countries: those that
currently form part of the Mercosur and those of the Pacific Alliance
(Group of Eight, or MAP Group).
Such convergence does not necessarily imply that these two integration
processes, born from very distinct historical backgrounds and that have
used different methodologies, will have to merge. Neither is this perceived
as necessary. But it does suppose that some progress is made in the multiple
steps that have already been agreed to strengthen the connectivity and
the convergence between the respective economic and productive systems,
with the ensuing consequences at the level of regional governance.
Argentina, still holding the temporary Presidency of Mercosur and
as part of the Troika of the G20, has the opportunity to continue driving
the momentum that characterized its term in the Presidency of the G20.
The upcoming bilateral meeting between the Presidents of Argentina and
Brazil, that will take place next June in Buenos Aires, the Summit of
the MAP Group in Lima, in July and, later on, the Mercosur Summit itself,
also in July of this year, provide appropriate frameworks to promote actions
in the abovementioned areas.
As we have pointed out on other occasions, at least three simultaneous
conditions are required for the effective commercial insertion of a country
in the world -such as the case of Argentina and many others-, especially
in order to obtain the desired results. Such conditions are: a correct
diagnosis of the opportunities that the global environment can offer in
the short but, above all, in the long term; a realistic assessment of
the degree of effective agreement that can be expected in the relations
with other countries of the corresponding regional context, and a strategy
that is effective in guiding the actions to be developed and that aim
to have a reasonable degree of consensus at national level.
The global scenario tends to offer multiple simultaneous options for
the insertion of a country in the world. One of the factors contributing
to this is related with the growth of the urban middle classes in emerging
countries, especially in Asia. This means a significant growth of consumers
of middle-class income empowered by the awareness of the multiple options
available to them when choosing goods and services adapted to their needs,
values, tastes and preferences. Added to this is the effect of the greater
degree of connectivity between the different markets, as a result, among
other factors, of the shortening of physical distances, the development
of digital commerce, and the proliferation of transnational value chains.
Hence the concept of a "multiplex" world, coined by Professor
Amitav Acharya (see the August
2017 edition of this Newsletter on http://www.felixpena.com.ar/),
becomes quite useful to understand, from the perspective of a developing
country, the global context in which competition for world markets, of
goods, services and productive investments, is inserted.
This is the reason why in the global scenario that is emerging today,
where there is a predominance of actors with multiple options (countries,
citizens, companies and consumers), those who aspire to compete can no
longer ignore the question on how to adapt their strategy of international
insertion to a reality in which competition for world markets will be
increasingly dynamic. Therefore, it will be difficult to take for granted
the access to the demand for goods and services that can be offered. Moreover,
the shifts of competitive advantages will not be hereafter just the result
of technological changes or the effects of public policies. Increasingly,
they will depend on the decisions of a large number of consumers, scattered
in numerous and diverse markets and with multiple options at their fingertips.
In the perspective outlined above, it is worth asking about the idea of
a convergence between two groups of Latin American countries. They are
the ones that currently form part of the Mercosur and the Pacific Alliance.
Together they constitute what may be called the Group of Eight, or the
As in the case of other groups of countries that are relevant to understanding
contemporary international relations -such as the "Group of 7"
or the "Group of 20"- they are valued for their ability to take
initiatives on issues that facilitate international, global or regional
governance and have an effective potential to penetrate reality. By acting
as a group, that is, jointly and not necessarily with the formal structure
of an international organization, they are perceived in their respective
spheres of action as relevant actors not to be overlooked by other countries
or groups of countries.
The articulation between the member countries of the Mercosur and those
of the Pacific Alliance is recognized as one of the top priorities of
the Latin American foreign policy of Argentina. It is also true for each
of the other countries that form part of these two processes of regional
Such articulation does not necessarily imply the merging of two integration
processes that originated from two distinct historical backgrounds and
that have used different methodologies so far. Neither is this perceived
as necessary. But it does suppose that progress is made in the multiple
steps that have already been agreed to strengthen the connectivity and
the convergence between the corresponding economic and productive systems,
with the ensuing consequences at the level of regional governance. Some
steps in this direction were included in the
"Action Plan" approved at the Summit meeting in Puerto Vallarta,
Mexico, on July 24, 2018 (see http://www.cartillaciudadania.mercosur.int/).
Moreover, these countries are necessary actors in any initiative of joint
action that aspires to permeate the Latin American reality, especially
for what they represent for the region as a whole, for example, in terms
of percentage of population (81%), gross product (86%), exports (89%)
and foreign investment flows (81%).
Without these eight countries, an economic integration initiative and
its multiple developments could hardly be visualized as having the necessary
scope and effective regional impact and, therefore, a reasonable global
projection. At the time, all eight countries participated in the creation
of the main regional Latin American trade agreements (along with Bolivia,
Ecuador and Venezuela), which were, first, the Latin American Free Trade
Association (LAFTA), in 1960, and the Latin American Integration Association
(LAIA), in 1980. (See our article published in the Foreign Trade Supplement
Nación" newspaper on February 14, 2019, on https://www.lanacion.com.ar/).
Without overlooking the difficulties that currently characterize many
regional integration processes -among others the European Union itself,
as the Brexit crisis has evinced-both the Mercosur and the Pacific Alliance
have shown, at the highest political level, that they value the idea of
gradually building a convergence around common regional objectives.
It is a convergence that is in the process of development based on the
acknowledgement of the existing differences in the methodologies used
in each integration process. But it is also being developed by considering,
precisely, the multiple benefits that can result by linking, within a
shared institutional framework, the strategies of insertion of each country
in the international system, in world trade and, especially, in international
trade negotiations. It is a cooperation process supported by a shared
analysis of the challenges and opportunities posed to the countries of
the region as a result of the structural changes observed in global competition.
In this perspective, and as we have also pointed out on other opportunities
(see in particular
our June 2018 newsletter on http://www.felixpena.com.ar/), the LAIA
provides an appropriate institutional framework for the development of
agreements that contribute to the convergence, over time, of these two
main processes of Latin American integration, in particular due to the
provisions on partial scope agreements of Article 9 of the Treaty of Montevideo
of 1980 and, especially, of Article 11, which refers to the modality of
economic complementation agreements.
That of partial scope agreements was, perhaps, one of the main innovations
that were introduced with respect to what was the institutional framework
derived from the LAFTA. They are regulated in their many variants in Resolution
2 of the Council of Ministers of August 12, 1980. Based on previous experiences,
such as that of the Andean Group, they even open the possibility of sectoral
and multisectoral approaches for the gradual construction of spaces of
integration among Latin American countries, in a manner compatible with
the rules of the multilateral trading system.
The countries of the Pacific Alliance and of the Mercosur have entered
into various economic complementation agreements that are, in fact, interconnected
and cover a broad spectrum of reciprocal trade liberalization. The idea
of formally connecting them within the framework of an economic complementation
agreement between the eight countries, with a gradual evolution, would
allow further progress in the convergence between both sub-regional integration
processes, including an extension negotiated with other members of the
LAIA such as, for example, Cuba and Panama, among others. It would allow
the development of an institutional architecture favorable to the joint
insertion of the countries of the region in global economic competition.
Looking forward, two plans of joint action to be developed by this "MAP
Group" can be imagined. The first is that of the issues incorporated
in the mentioned "Joint Action Plan", approved at the Summit
of Puerto Vallarta. They imply a diversity of actions to be developed
at the institutional and regulatory level. The second refers to any joint
initiatives that this group of countries can promote in order to influence
international affairs that are relevant to their own interests, be they
global or regional in scope.
In relation to this second aspect, the convenience of developing joint
initiatives by this group of countries in reference to three issues that
have great relevance for their agendas of international commercial relations,
can be visualized.
A first relevant issue for a joint action of this group of countries
is that of the reforms that should be introduced in the WTO. The last
G20 Summit gave a clear momentum to this process of reforms. What are
or should be the WTO reforms that may be of most interest for the countries
of the Mercosur and the Pacific Alliance? What concrete proposals could
be presented by this group of countries? And what would be the position
of the group in relation to the proposals introduced by other countries
or groups of countries such as the US, the EU, China or the Group of 7,
Without overlooking other issues, one that deserves special attention
refers to the rules that affect the compatibility of preferential agreements
concluded by developing countries with the commitments made in the multilateral
trading system. In fact, the interpretations that have prevailed in relation
to Article XXIX of the GATT 1994 have generated restrictions that are
not necessarily based on what is explicitly prescribed in its text. Among
other examples, we can mention the impact that such interpretations have
had on the development of the negotiations of the bi-regional agreement
between Mercosur and the EU. (On this topic, see the April
2018 edition of this newsletter on http://www.felixpena.com.ar/).
A second relevant issue is the strengthening and full harnessing of
the opportunities offered by the LAIA, especially through the instrument
of partial scope agreements mentioned above. This is a very practical
and functional instrument for the realization of actions between two or
more countries aimed at promoting multiple modalities of trans-national
productive chains with the objective of having regional scope and global
A third issue is the development of preferential trade agreements of
bi-regional scope involving the countries of the Pacific Alliance and
the Mercosur. Examples of this may be the bi-regional agreements with
the EU and with China, without overlooking other imaginable possibilities.
The conclusion of the bi-regional agreement between the Mercosur and
the EU, if materialized, could open the way to the connection with the
agreements that the EU has already reached with countries of the Pacific
Alliance, as proposed at the time by Ricardo Lagos and Osvaldo Rosales.
This would give birth to a network of bi-regional agreements that would
be functional to the promotion of joint investments involving companies
from both regions. The same could result from a network of bi-regional
agreements between countries of the Group of 8 and China and that were
connected to each other.
The connection between the countries of the Pacific Alliance and those
of the Mercosur can then reach its full potential if it is developed in
the three aspects mentioned above. Hence, Argentina, currently holding
the temporary Presidency of Mercosur and still part of the G20 Troika,
has an excellent opportunity to continue driving the momentum that characterized
its term in the G20 Presidency.
The upcoming bilateral meeting of the Presidents of Argentina and Brazil,
to be held in Buenos Aires on June 6 of this year; the Summit of the countries
of the MAP Group, that will be take place in Lima, on July 5 and, the
Summit of the Mercosur in Santa Fe, on July 16 and 17, provide appropriate
frameworks to promote actions in all the aspects mentioned above.
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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