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  Félix Peña

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

A NEGOTIATIONS THAT OPENS MULTIPLE OPPORTUNITIES AND CHALLENGES
The agreement with the European Union and the productive transformation of Mercosur


by Félix Peña
July 2019

English translation: Isabel Romero Carranza


 

The bi-regional agreement between Mercosur and the EU will generate opportunities as well as challenges. The opportunities would translate into investments, trade flows and job creation. They would also manifest in a good image, even prestige, for the policies of international integration of both regions and their countries, as well for those who make them possible.

The challenges will be related to the ability that the government, employers and society at large will need to have in order to overcome the practical difficulties that will arise in the future. Facing these challenges will require talent, political will and organizational technology.

Based on the observation of previous experiences of specific agreements of this type with the EU, there are four main steps that would need to be taken so that the bi-regional agreement is effectively concluded and enters into force.

The first step would be to make the text of the agreement widely available to the public, especially its "fine print". A second step would be to start the process of reaching a national consensus so that parliamentary approval of the agreement is possible. The third step would be to prepare, as a country, to effectively take advantage of the agreement. The final and fourth step would be to promote, especially within the so-called G8, i.e.: the joint action of the Mercosur and the Pacific Alliance countries -, the articulation of the network of bi-regional agreements that would exist with the European Union.


The negotiations between Mercosur and the European Union took 20 years to finalize and 28 years have elapsed since the political decision was taken to initiate such an unexpectedly long path. A new stage has opened which, if successful, will lead to the full entry into force of the agreement and, most importantly, to the effects sought in terms of trade and productive investments.

During all those years, the idea of negotiating with the EU had the support, even an enthusiastic one, of the successive governments of Argentina. Thus, both Mercosur and the idea of partnering with the EU are examples of our ability to generate agreements on strategic issues with long-term effects. In both cases, however, it is still necessary to show a similar capacity to translate the ideas into concrete actions.

A new stage in this journey has now begun. It could take two to three years to conclude it. Only then would the agreement be effectively finalized so that its effects permeate the realities of both regions (the texts in their present state can be accessed on the website of the Argentine Foreign Ministry, https://cancilleria.gob.ar/es/acuerdo-mercosur-ue).

The bi-regional agreement will generate opportunities as well as new challenges. The opportunities would translate into investments, trade flows and job creation, and would also bestow prestige on the policies for international integration of both regions and their countries, as well as on those who make them possible.

The challenges would be related to the capacity that the government, employers and society at large will need to have in order to overcome the practical difficulties that arise in the future. This will require talent, political decision and organizational technology.

What actions would Argentina need to take -in a coordinated manner with the Mercosur partners if necessary-so that the bi-regional agreement is, in fact, concluded and becomes effective? Based on what has been observed in other specific cases of agreements of this kind with the EU, it would be necessary to take at least four main steps, without overlooking other actions that may be necessary as well. Some steps would even need to be taken simultaneously.

The first step would be to make the texts, especially the "fine print" of the agreement widely available to the public. In order to analyze precisely what has been agreed, it will be necessary to study the full texts and evaluate them from the point of view of the different sectors involved, at national level and at the level of the different provinces. Moreover, it will be necessary to review the texts and the fine print considering the perspective of the dynamics of trade and investment of the future. This will involve paying attention to the mechanisms that would implicitly or explicitly allow to activate different modalities of "escape valves" and, at the same time, those that would aid in the development of an "assisted transition" for SMEs that seek to reconvert in relation to the new expanded market. The latter were applied at the time by the EU to facilitate the incorporation of Eastern European countries.

A second step would be to achieve a national consensus that would enable the parliamentary approval of the agreement. This means explaining the contents of the agreement with respect to its possible impacts on each sector and in each province and, above all, clarifying what the effects would be in the case that there was no parliamentary approval.

A "minor detail" to consider at this stage is that there is a possibility that our country does not achieve parliamentary approval, while the other countries of Mercosur do. We should bear in mind that the idea of bilateral negotiations of Mercosur member countries with the EU and with other relevant players in world trade, such as the US and China, has been raised on several occasions. Depending on how it is interpreted and applied, this idea could even mean the end of Mercosur.

A third step would be to prepare, as a country, to effectively take advantage of the agreement. This should be a priority plan of action for the provinces, especially in the perspective of the "productive transformation" which will mean that the number of export companies will jump to 40,000, mostly SMEs-as foreseen in the "Argentina Exports" plan (see https://www.argentina.gob.ar/).
For companies and institutions, it would require preparing to compete effectively in the European market, especially in "niches" where they can have outstanding advantages. It would also involve training capable specialists to improve the ability to understand how to operate successfully in the European market, taking advantage of the benefits resulting from the bi-regional agreement. Moreover, it would also be a priority field of action for academic institutions, which would benefit greatly from their inclusion in specialist training networks for the Mercosur and the bi-regional space.

And a fourth step would be to promote, especially in the ambit of the so-called G8-that is, the joint action of the Mercosur and the Pacific Alliance countries- the articulation of the network of bi-regional agreements that would exist with the EU, following the proposal advanced at the time by Ricardo Lagos and Osvaldo Rosales from Chile. The accumulation of origin would then be a fundamental instrument. In this respect, the LAIA would provide the necessary institutional scope.

On the topics covered in this newsletter and the bi-regional negotiations Mercosur-EU see the reference and the texts of 58 other articles published by Félix Peña in recent years on https://eulacfoundation.org/. .


Recommended Reading:


  • Acharya, Amitava; Buzan, Barry, "The Making of Global International Relations. Origins and Evolution of IR at its Centenary", Cambridge Univerisity Press, Cambridge 2019.
  • Amstrong, Shiro, "The rule based economic disorder after Osaka G20", East Asian Forum, 30 June 2019, en https://www.eastasiaforum.org/
  • Bouzas, Roberto, "Ahora es el momento de evaluar la letra chica de cada capítulo", diario "Clarín", Opinión, 29 de junio de 2019, página 12.
  • Buzan, Barry; Lawson, George, "The Global Transformation. History, Modernity and the Making of International Relations", Cambridge Studies in International Relations, Cambridge University Press, Cambridge 2015.
  • Días, Alejandro, "Ningún acuerdo funcionará sin una transformación productiva", diario "El Cronista", 2 de julio 2019.
  • Eisenman, Joshua, "China's geostrategic conception of the developing world", East Asian Forum, 1 July 2019, en https://www.eastasiaforum.org/
  • Elizondo, Marcelo, "Mercosur-UE: oportunidades laborales". Diario "La Nación", 14 de julio 2019, en https://www.lanacion.com.ar/.
  • Frandi, Nico, "WTO and Geopolitical Changes. Multilateralism and Coalitions of Members among Crises, Adaptation to Change and Rebirth", IAI - Instituto Affari Internationali, Documenti IAI 19/10 - May 2019, en https://www.iai.it/.
  • Frey, Carl Benedikt, "The Technology Gap. Capital, Labor, and Power in the Age of Automation", Princeton University Press, Princeton & Oxford, 2019.
  • García Herrero, "Europa despierta del letargo", diario "El País", 14 de julio 2019, en https://elpais.com/economia/.
  • González, Anabel, "The EU-Mercosur Trade Accord Sends a Signal to the World's Protectionists", PIIE - Peerson Institute for International Economics, July 2, 2019, en https://www.piie.com/.
  • Malamud, Carlos; Steinberg, Federico, "Acuerdo UE-Mercosur: ¿quién gana, quién pierde y qué significa el acuerdo?", Real Instituto Elcano, en http://www.nuevospapeles.com/.
  • Mauvecin, Maximiliano, "Las regions subnacionales en el acuerdo Mercosur-UE", Suplemento Comercio Exterior del diario "La Naciòn", 12 de Julio 2019, en: https://www.lanacion.com.ar/.
  • Mellado, Noemí, "Unión Europea-Mercosur: Marchas y Contramarchas en la Asociación Birregional", Informe Integrar, IIL-FCJS-UNLP, n° 117 - Julio 2019, en http://www.iil.jursoc.unlp.edu.ar/.
  • Negroponte, Nicolas, "Being Digital", Vintage Books, New York 1996.
  • Pagni, Carlos, "Macri y Bolsonaro ahora miran hacia Estados Unidos", diario "La Nación", 4 de julio 2019, página 10, en https://www.lanacion.com.ar/.
  • Peña, Félix, "El camino a recorrer para empezar la nueva relación comercial con la Unión Europea", Suplemento Comercio Exterior del diario "La Nación", 4 de julio 2019, página 3, en https://www.lanacion.com.ar/.
  • Pomeranz, Kenneth, "The Great Divergence. China, Europe and the Making of the Modern World Economy", A Princeton University Press E-Book, Princeton and Oxford, 2000.
  • Ravier, Adrián, "Libre comercio e importación de instituciones", diario "El Cronista", 1 de julio 2019.
  • Schuster, Alberto, "Argentina en tres dimensiones", diario "El Cronista", 2 de julio 2019.
  • Solana, Javier, "El espíritu perdido del G20", diario "El País", Opinión, 27 de junio 2019, página 13, en https://elpais.com/.
  • Vicchi, Alejandro, "Mercosur-UE. Las preguntas que dejó la firma del acuerdo", Suplemento Comercio Exterior del diario "La Nación", 4 de julio 2019, página 4-5, en https://www.lanacion.com.ar/.

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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