The negotiations of the bi-regional agreement between Mercosur and the
European Union have been prolonged, partly due to their successive interruptions.
The international context in which they are inserted has changed significantly
since the beginning of the path that led to the announcement of the signing
of the political agreement on June 28 of this year.
As integration processes, neither Mercosur nor the EU have the same degree
of external credibility that they had when the negotiations began. In
the European case, the so-called Brexit and the perception of a growing
euro-skepticism, among others, do not contribute to the image of integration
and respect for the commitments agreed. In the case of Mercosur, questions
on the real scope of the integration process and its sustainability have
been raised lately.
What is certain is that there is a new road ahead. Traversing it could
take between two and three years. Only after the necessary parliamentary
ratifications take place would the Mercosur-EU bi-regional agreement be
concluded and its effects penetrate the realities of both regions.
After the conclusion of the bi-regional agreement, we would be entering
the "day after" the negotiations. From that moment on we will
be able to assess the quality of the preparation that Mercosur countries
(and especially their companies) have developed based on their decision
to actually negotiate the agreement.
As we pointed out in the June
2010 edition of this newsletter (see http://www.felixpena.com.ar/),
negotiating with other countries and at the same time preparing to take
full advantage of the opportunities that result from the agreements are
inseparable elements of an effective external commercial strategy. One
conditions the other, since the results of an international trade negotiation
cannot overlook the state of preparedness that a country and its productive
sectors can realistically achieve. This is even more complex when a negotiation
involves countries with varying degrees of development.
Preparing for the "day after" the entry into force of the bi-regional
agreement would seem to be a priority for our country and its Mercosur
partners today. This requires the design of an external commercial integration
strategy that takes into account the conclusion of the bi-regional agreement,
as well as the need for companies to develop capabilities in order to
take full advantage of the opportunities that are supposed to result from
A pessimistic outlook on the possibilities that would result from the
bi-regional agreement, translated into a passive attitude, especially
from the business sectors and reflected in a lack of preparation to successfully
navigate the "day after", could later on mean losing business
opportunities that usually require a long time to develop fully.
Without overlooking others, three fronts of action become relevant for
Argentina and its partners to design an external commercial integration
strategy in the new world scenario, which implies preparing for the "day
after" the entry into force of the bi-regional agreement. These fronts
are: that of the different modalities and intensities of productive linkages
at transnational scale; that of the quality of the connectivity between
the different national geographies, and that of the creation of ground
rules that affect global or regional economic competition. These are relevant
fronts of action, even if the agreement is not realized as it was conceived,
at least with respect to the countries participating in the current Mercosur.
At the same time, at least three issues stand out due to their relevance
in the preparatory stage of the actual entry into force of the bi-regional
agreement. These are issues that, from an Argentine perspective, will
require special and priority attention.
A first relevant issue will be the adaptation of the policies and the
organization of the public sector, and in particular its forms of interaction
with the business sector and the labor unions, in order to gradually place
the country in a position to navigate the new competitive environment
that is being created by the bi-regional agreement and its many possible
One of these ramifications would be the interrelations that would result
between the preferences that are negotiated and those that originate from
other trade agreements, such as those that the EU has concluded or might
conclude with other Latin American countries, for example, those of the
Pacific Alliance, with which Mercosur has already or will eventually negotiate
preferences (see the July
edition of this newsletter on http://www.felixpena.com.ar/).
Such interrelation would enable the development of strategies of different
types of productive linkages of transnational scope.
In order to do so, it will be necessary to define an intelligent distribution
of responsibilities among the different ministries and, at the same time,
select the public policies that will require more attention based on the
commitments that the development of the agreement generates and also the
competitiveness challenges that operating successfully in the European
markets will entail.
When defining these competences, it will be advisable to keep in mind
that the bi-regional agreement is to be regarded as part of a wider network
of preferential trade agreements that encompasses countries from very
different regions in the world. The uncertain perspectives of the WTO
and its current ground rules make it essential to undertake international
negotiations aimed at developing such a network of preferential trade
A second relevant and complementary issue will be to develop policies
and actions aimed at achieving a significant increase in the number of
SMEs that are able to project their current and potential capacity to
produce goods and provide services to the European market in a competitive
and sustainable manner. The final aim would be, of course, to achieve
a sustained presence in the EU markets, at least three years of continued
presence in the aisles or of participation in productive chains.
This will imply, both for the national government and for the provincial
governments -especially those interested in taking advantage of the bi-regional
space in relation to the local capacity to produce goods and provide services-
strengthening the institutions involved in the promotion of trade and
investment, as well as the coordination between them.
It will also involve promoting public policies aimed at stimulating the
operational link between academic and research and development institutions
-both public and private- and the operators of the productive sectors,
in order to develop a broad network of competitive intelligence and links
between the technological and productive capacity available in Argentina.
Among other functions, this network would contribute to have updated knowledge
on the preferences of the different European consumers, and on the factors
that influence any changes in their priorities.
Finally, the third issue will be to strengthen Mercosur's ability to
operate as an institutional framework that is functional to the competitive
insertion of its member countries in the economic context that will develop
as a result of the bi-regional agreement.
Beyond the debate, sometimes a little theoretical, about whether Mercosur
is or should be a free trade zone or a customs union, it would be necessary
to emphasize an intense effort to transform it into a mechanism of joint
work between its member countries, that it is effective, that works based
on rules that are complied with, and that contributes to achieve clear
competitive gains for its member countries.
The quality of its Secretariat, including that of its website, conceived
as a key instrument of a joint effort of competitive intelligence on international
markets, would then be an effective contribution to the international
insertion of its member countries, including the necessary capacity to
face international trade negotiations that are effectively concluded and
The three relevant issues mentioned in the preceding paragraphs, involve
developing the capacity of the Mercosur countries to act as a group with
a reasonable degree of organization. Something like being perceived as
a "team." which is a concept more often related to sports.
An effect of this vision is to conceive trade agreements, in which a
country or a set of countries participate in, as generators of links between
the different national systems -both economic and political- that are
difficult to untie due to the positive effects they bring and the high
regard of the respective societies.
Perhaps, this was the idea that drove Jean Monnet, one of the founders
of the process which led to the creation of the current European Union,
in his approach to generating de facto solidarities based on common visions,
rules and institutions. Seventy years later it still demonstrates its
efficacy, especially in what has been experienced in the case of the Brexit,
which has proven how difficult it is for a country to disassociate from
the economic and social networks that are generated by a deep integration
process such as that of the EU.