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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
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MERCOSUR'S POST-BREXIT RELATIONS WITH THE UK
Negotiating a trade and investment agreement: a priority objective?


by Félix Peña
February 2021

English translation: Isabel Romero Carranza


 

Great Britain has -and has historically had- a relevant importance for the economies of the Mercosur countries and, after Brexit, it continues to have a significant and preferential trade relationship with the European Union.

Moreover, there is still a possibility that Mercosur will eventually also have a preferential trade relation with the EU itself. This is something that today would seem to depend on the European will to put into effect the agreement whose negotiation, in principle, has been formally concluded..

Beyond the historical ties that each of the Mercosur countries has with Great Britain, there are many factors that lead to attribute future importance to the negotiation of a "post-Brexit" preferential trade agreement between the two parties.

A first factor refers to the relevance of Great Britain in the international system, especially in terms of its economic and commercial dimension. Certainly, it is a relevance that is more understandable if one takes into account Britain's own vision of its post-Brexit reality.

Another factor to consider is related to a characteristic that Great Britain has always sought to have in its international insertion, which is to be a bridging country, with the conditions to serve as a connection between different players in the international system. This is a valuable capacity for any attempt to build spaces of cooperation between very different nations that, at the same time, can be linked to each other.

Finally, a third factor should be -especially from an Argentine perspective-to introduce firm commitments, which, if well conceived and developed, may allow an intelligent solution to the pending issue of the sovereignty of the Malvinas Islands.

Adding these factors together and placing them within the perspective of an agreement aimed at redesigning both the role of Great Britain in the world and its special relationship with the EU, as well as that of the countries of Mercosur inserted in a special relation with the Latin American region, would make this eventual agreement an interesting precedent for the approach of a future international order based on the convergence of the diversity of multiple regions.


Upon completion of the Brexit process on January 1, 2021, Mercosur's trade relationship with Great Britain will require the negotiation of a special agreement to ensure its preferential scope within the framework of the WTO. (In this regard, see the article by Norberto Pontiroli for the Grupo de Productores del Sur (GPS), included as recommended reading at the end of this newsletter).

It is worth remembering that Great Britain has -and has historically had- a significant importance for the economies of the Mercosur countries and that, after Brexit, it continues to have a preferential trade relation with the European Union. (In this regard refer to the text of the agreement between the United Kingdom and the EU, concluded on December 24, 2020 and an assessment of the post-Brexit relations between both parties, in the European Commission documents included as recommended reading at the end of this newsletter. See also the documents originating from the UK government included in the same section).

It is still a possibility that Mercosur will eventually also have a preferential trade relation with the EU itself. This would seem to depend on the European will to put into effect the agreement whose negotiation has, in principle, been formally concluded (see in this respect our comments in several issues of this newsletter, especially during the period after the conclusion of the commercial part of the bi-regional agreement). However, it also depends on the image of credibility of the future of Mercosur itself. In this regard, it is worth reading the recent article by Renato Baumann, with the suggestive title "¿Ainda Mercosul?" ("Still Mercosur?"), published in the newspaper Valor Económico of Sao Paulo on January 25, 2021 (see the reference to this article as recommended reading of this Newsletter).

Beyond the undeniably tight historical links of each of the Mercosur countries with Great Britain, which have not always been perceived as having a positive scope, there are many factors that lead to attribute future importance to the negotiation of a "post-Brexit" preferential trade agreement between the two parties.

A first factor refers to the relevance that Great Britain has in the global international system, especially because of its economic and commercial dimension. Certainly, it is a relevance that is more understandable if one takes into account Britain's own vision of its post-Brexit reality.

Some recent publications are recommended in order to fully grasp the scope of a positive vision of the relevance that Great Britain will have in the world of the future. All of them are very useful to undertake the necessary task of trying to understand, from the Mercosur countries, the perspectives of those with whom we are trying to negotiate agreements that aspire to have long-term effects.

Without excluding others, the following are, in our opinion, highly recommendable publications, due to their current relevance and content:

  • The first is the report by Bob Seely and James Rogers, entitled "Global Britain: A Twenty-First Century Vision" (The Henry Jackson Global Britain Programme, London 2019).

  • The second is the book by Alex Brummer, "The Great British Reboot. How the UK Can Thrive in a Turbulent World" (Yale University Press, New Haven and London, 2020).

  • A third publication is the paper by Robin Niblett, "Global Britain, global broker. A blueprint for the UK's future international role" (Research Paper - Europe Programme, Chatham House, London, January 2021).

  • Finally, another recent publication is the book by Philip Stephens, "Britain Alone. The Path from Suez to Brexit" (Faber & Faber Limited, London 2021.

Two concepts are central to Alex Brummer's book and are reflected in the title. One is that of restarting or rebooting the British strategy, in the sense of starting over or going back to square one. The other is that of the uncertainty of the global context. Combining the two gives us an idea of the scope of the approaches developed by the author.

These publications encourage a positive view of the role that Great Britain can play in a world that is increasingly uncertain and, at the same time, characterized by the presence of multiple significant players in the global trade of goods and services and in transnational investments. Also, because of Britain's proven ability to influence the construction of the international order.

Another factor to be taken into account is that Great Britain has always sought to be a bridging country in its international insertion, with the conditions to serve as a connection between different players in the international system, characterized by their different dimensions and even different perspectives on politics and the international order.

In this regard, we stated in our article published in the Foreign Trade Supplement of newspaper La Nación, on February 13, 2020, that one of the objectives of the Mercosur agreement with Great Britain should be precisely aimed at strengthening their respective capacities to operate as bridges between countries of different regions, both developed and developing. This is a very valuable capability for any attempt at building spaces of cooperation between different countries which, at the same time, need to be linked to each other, and without the perspective of becoming dominant powers. (On trade relations between Argentina and Great Britain, see Félix Peña, "Relaciones comerciales entre Argentina y Gran Bretaña: perspectivas hacia el futuro", ("Trade relations between Argentina and Great Britain: prospects for the future.") article written on the occasion of the 100th anniversary of the Argentine-British Chamber of Commerce, 2015, and published on www.felixpena.com).

Finally, a third factor should be -especially from an Argentine perspective- the introduction of firm commitments, which, if well conceived and developed, may enable an intelligent solution to the pending issue of sovereignty over the Malvinas Islands. It is obvious that this will not be an easy endeavor, and that it may mean that the steps taken in the right direction require an even longer period of time than would be desirable. The recent experience of the non-inclusion of products originating in the Islands in the agreement concluded between the EU and Great Britain is not a minor fact when considering the future of the issue of the islands in a reasonable Argentine perspective

Considering all these factors and viewing them in the perspective of an agreement projected to reset both Great Britain's role in the world and its special relation with the EU, as well as that of the countries of Mercosur within its special relation with the Latin American region, would make this potential agreement an interesting precedent for the approach of a future international order based on the convergence of the diversity of multiple regional spaces.


Recommended Reading:


  • Actis, Esteban; Creuss, Nicolás, "La Disputa por el Poder Global. China contra Estados Unidos en la crisis de la pandemia", Foreword by Andrés Malamud, Capital Intelectual, Buenos Aires 2020.
  • Baumann, Renato, "¿Ainda Mercosul?, A julgar per los indicadores recentes, o grupo parece confirmar a percepcao de nao ser uma história de sucesso", Opiniao, Valor Económico, 25-01-2021.
  • Borghesi, Massimo, "The Mind of Pope Francis. Jorge Mario Bergoglio's Intellectual Journey", Liturgical Press Academic, Collegeville, Minnesota, 2018.
  • Brummer, Alex, "The Great British Reboot. How the UK Can Thrive in a Turbulent World", Yale University Press, New Haven and London 2020.
  • European Commission, "EU-UK Trade and Cooperation Agreement. A New Relationship with Big Changes", http://www.ec.europa.en/.
  • European Commission, "The EU-UK Trade and Cooperation Agreement", http://www.ec.europa.en/. Brussels 2020.
  • Faggioli, Massimo, "The Liminal Papacy of Pope Francis. Moving toward Global Catholicity", Orbis Books, New York 2020.
  • Faggioli, Massimo, "Joe Biden and Catholicism in the United States", Bayard Inc., New London 2021.
  • Fernández Saavedra, Gustavo, "Bolivia en el laberinto de la globalización", Ensayos, Plural Editores - Instituto Prisma, La Paz, 2004.
  • Guadagni, Alieto Aldo, "Biden, ante un escenario internacional liderado por China", newspaper "La Nación", Opinion Section, January 25,2021, p. 29.
  • Kaplan, Robert D., "Warrior Politics. Why Leadership Demands a Pagan Ethos", Vintage Books, Random House, New York 2002.
  • Kaplan, Robert D., "The Revenge of Geography. What the Map Tells Us About Coming Conflicts and the Battle Against Fate", Random House, New York 2013.
  • Kaplan, Robert D., "Asia´s Cauldron. The South-China Sea and the End of a Stable Pacific", Random House, New York, 2014.
  • Mosca, Gaetano, "The Ruling Class", McGraw-Hill, Book Company, New York and London 1989.
  • Niblett, Robin, "Global Britain, global broker. A blueprint for the UK's future international role", Research Paper - Europe Programme, Chatham House, London, January 2021
  • Phelps, Stephen, "The Tizard Mission. The Top-Secret Operation that Changed the Course of World War II", Westholme. Yardley 2010.
  • Pontiroli, Norberto, ""Desafíos y oportunidades para un Acuerdo Mercosur-Reino Unido post-Brexit". in Grupo de Países Productores del Sur (GPS), September 2020 (https://grupogpps.org/).
  • Rosanvallon, Pierre,"Le Siecle du Populisme. Histoire, théorie, critique", Éditions du Seuil, Paris 2020.
  • Seeley, Bob; Rogers, James, "Global Britain: a Twenty-First Century Vision", Global Britain Programme - Henry Jackson Society, London, February 2019.
  • Seligman, Martin E.P., "Authentic Happiness. Using the New Positive Psychology to Realize Your Potential for Deep Fulfillment", Nicholas Brealey Publishing, London -Boston 2003.
  • Seligman, Martin E.P., "Aprenda optimismo. Haga de la vida una experiencia maravillosa". Debolsillo, Penguin Random House, Barcelona 2014.
  • Stephens, Philip, "Britain Alone. The Path from Suez to Brexit", Faber & Faber Limited, London 2021.
  • United Kingdom Government, "Brexit: New Rules are Here", www.gov.uk/transition.
  • United Kingdom Government, "Strategic Trade Advisory Group", www.gov.uk/.

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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