A TIME FOR DIAGNOSIS, RENEWAL AND COORDINATION
The negotiating agenda of global trade and regional integration.
by Félix Peña
English translation: Isabel Romero Carranza
During the second semester of 2019, the institutional
fronts that stand out in the agenda of international trade negotiations
and economic integration of Argentina and its Mercosur partners are that
of the WTO at global level; that of Mercosur at regional level; and that
of the Mercosur-EU agreement at the bi-regional level. This, without overlooking
other negotiations in which they are also participating or that are beginning
to develop, and which have different degrees of political and economic
The mentioned agenda of negotiations takes place in a complex and
uncertain international context. Among other factors, the characteristics
of the negotiations derive from the effects of the new configuration in
the distribution of world power; the greater connectivity that technological
change is generating between countries, companies and consumers-sometimes
with multiple options for the development of their international strategies-and
the proliferation of different types and degrees of ethnic, ideological,
emotional and even religious fracture.
Three main qualities are required of any country that aspires to negotiate
and to develop an efficient and intelligent insertion in the global international
system and in its own region. The first requirement is to have an accurate
diagnosis of the factors that are influencing the current changes in the
structure and functioning of the international system. It is a diagnosis
that requires continuous updating and a view from the perspective of each
country. The second is to have concrete proposals on how to renew and
adapt the respective institutional, global or regional spaces to the new
world realities. Finally, the third is to provide practical ideas that
have the potential to be effective, in order to achieve the coordination
of the different national interests, both at global and regional institutional
The world has entered a phase of "polygamous" international
relations, in which the protagonists try to develop multiple alliances,
simultaneous and non-exclusive, and even contradictory with each other.
It is a phase in which the paradigms, concepts and theoretical approaches
from the past are becoming obsolete.
AIn the second semester of 2019, in the agenda of international trade
and economic integration negotiations of Argentina and the Mercosur partners,
those corresponding to the following institutional fronts stand out: that
of the WTO at global level; that of Mercosur, at regional level; and that
of the Mercosur-EU agreement, at the bi-regional level (see our article
agreements in uncertain times", published in the Foreign Trade
Supplement of La Nación newspaper on June 13, 2019, on https://www.lanacion.com.ar/;
on the topic of the Mercosur, see the January
2019 edition of this newsletter on http://www.felixpena.com.ar/).
This without overlooking other ongoing negotiations or that are beginning
to develop, and which have different degrees of political and economic
The development of such agenda highlights the importance that the so-called
Group of 8, or MAP Group, has for our country and the Mercosur partners
as an ambit for trade negotiations, regional integration and agreement
between the countries of the Pacific Alliance and the Mercosur, especially
for their joint action at the global level (WTO) and in the Latin American
regional environment (ALADI). (In this regard, see the May
2019 edition of this newsletter on http://www.felixpena.com.ar/, and
our article published in "El Mercurio de Valparaíso"
newspaper, on June 3, 2019).
The current one is a negotiation agenda to be developed in an increasingly
complex and uncertain international context. Among other factors, its
characteristics derive from the effects of the new configuration in the
distribution of world power; of the greater connectivity that technological
change is generating between countries, companies and consumers-which
in many cases have multiple options for the development of their international
strategies-and of the proliferation of different types and degrees of
ethnic, ideological, emotional and even religious fractures.
As pointed out by experts in international politics, we have entered
a phase of "polygamous" international relations in which the
protagonists can choose to develop a strategy of various multiple alliances,
simultaneous and non-exclusive, and in which the paradigms, concepts and
theoretical approaches from the past are becoming obsolete.
In the case of economic integration agreements, especially if their founding
legal instruments specify the permanence over time, it will be necessary
for the different actors to state the reasons why a sovereign country
chooses to associate permanently with another country or group of countries,
especially the bordering ones (the existential dimension) and how such
an association can actually be developed (the methodological dimension).
The changes that are currently being observed lead us to affirm that
imagining the idea of economic integration between sovereign nations in
similar terms to those that prevailed in other times would not be convenient
or advisable. In this perspective, a dogmatic view of what should be,
for example, a free trade zone or a customs union seems dated. This vision
prevailed in the industrialized world until very recently, for example,
in relation to the interpretation of Article XXIV of the GATT-WTO. It
has conditioned -and would continue to do so-the protracted negotiation
to conclude the bi-regional agreement between the EU and the Mercosur.
In fact, perhaps it has been a determining factor in the difficulties
that have been experienced to institutionalize the apparent intention
to conclude this agreement.
What would be emerging would seem to be a phase of multiple alliances,
simultaneous and flexible, of great dynamism in their development. It
is a phase in which the development of "de facto solidarities",
resulting from the linkage of economic policies and productive investment
decisions based on the effectiveness of common rules, becomes more important.
As Jean Monnet pointed out at the founding moments of the European integration,
thus are generated sustainable collective disciplines among the associated
But it is also a phase in which any given country, irrespective of its
size, may have difficulties to navigate effectively in the global and
regional environment, in order to achieve its vision and objectives, if
it lacks a correct diagnosis of its capacity and its real possibilities
in the competition for power and international markets.
Three qualities are then required of any country that aspires to develop
an efficient and intelligent insertion in the global international system
and in its own region. The first is to have a good diagnosis of the factors
that are affecting the current changes in the structure and functioning
of the international system. It is a diagnosis that requires continuous
updating from the perspective of each country. The second is to have concrete
and acceptable proposals on how the institutional, global or regional
spaces in which a country operates can be renewed and adapted to the new
realities. And the third, is to provide practical ideas that have the
potential to be effective in order to achieve the coordination of national
interests at global and regional institutional level.
From the global agenda of this second semester, the issue of the reforms
of the multilateral system of international trade, institutionalized in
the WTO, should be noted for its importance for the Latin American countries
(see the February
2019 edition of this newsletter on http://www.felixpena.com.ar/).
Among other relevant issues that are also being debated between the member
countries, the strengthening of the dispute settlement mechanism stands
out due to its immediacy and practical relevance. Specifically, in practice,
it prevents the appointment of new members to the appellate body, which
is in fact blocked and that, should the current situation continue, would
be paralyzed by the end of this year.
What is really at stake is the functioning of a mechanism whose practical
effect is the preservation of a multilateral trading system guided by
common rules (see the article by Carlos López mentioned as recommended
reading: "WTO Reform and the Rule of Law ", on http://opiniojuris.org/).
The existing dispute settlement mechanism ensures that the common rules
are not exposed to the discretion of the countries with greater relative
power. This function is essential to preserve the validity of the main
contribution that derives from the current multilateral trading system
since the creation of the GATT, which is the "principle of non-discrimination".
The Latin American countries -including Argentina, the Mercosur countries
and those of the Pacific Alliance-would have much to lose if they fail
to preserve the functioning of a mechanism that guarantees the effective
predominance of the rules agreed in the multilateral system of trade.
Hence the importance of the countries of the region playing an active
and assertive role in the harmonization of interests among the member
countries of the WTO, in order to achieve reasonable and balanced solutions
to the issue of the dispute settlement mechanism, which is a central aspect
of the broader issue of the reforms that are needed to make the WTO more
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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