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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2021 | 2020 | 2020 | 2019 | 2018 | 2017 | 2016
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MERCOSUR'S INTERNATIONAL AGENDA
Global and regional challenges in the aftermath of the pandemic


by Félix Peña
March 2021

English translation: Isabel Romero Carranza


 

The agenda of Mercosur's international trade negotiations results from the issues that affect the relations between the member countries and the countries of the international system. These include those that are channeled through the international organizations that have a greater impact on the priorities of the integration process, such as the World Trade Organization.

There are three issues that seem to be the most relevant in Mercosur's 2021 agenda and, therefore, in the agendas of its member countries. These issues are relevant because of their simultaneous impact on the political, economic and legal dimensions that seem to be essential to understand Mercosur's development.

The first issue to be addressed relates to the idea of providing Mercosur with greater flexibility to face trade negotiations with other countries or groups of countries, through multiple forms of cooperation agreements.

The second issue is the participation of Mercosur countries in initiatives aimed at making the multilateral trade system, currently institutionalized in the WTO, more effective.

The third issue refers to the links established with other regions organized through different types of integration and economic cooperation agreements, such as the EU and inter-regional agreements in Asia, among others.

The intense agenda of international trade negotiations, both in Mercosur and in the Latin American region, makes it more necessary than ever to ensure the active participation of academic institutions in the process of analysis and action-oriented ideas. Thinking of concrete approaches and proposals that facilitate the projection to the world of the existing capabilities in the Latin American region will be an important factor in the future for the development of successful and effective strategies for the international trade insertion of the countries of the region.


In this opportunity, we will seek to expand on some of the ideas that were presented in the January edition of this newsletter, which focused on the concept of "Us and the World".

We will concentrate on what may be, in our opinion, the most relevant issues related to the agenda of Mercosur's international trade negotiations. In fact, these issues are closely related to the uncertainty that has emerged in the international system as a consequence of the coronavirus pandemic but, above all, to the effects of the changing dynamics of contemporary international relations. Such changes are increasingly revealing their impact on power relations, both political and economic, between nations and, in particular, between those that can be considered the main actors in the international system, in terms of their relative power.

The agenda of Mercosur's international trade negotiations is the result of some of the main issues that affect the relations between its member countries and the countries of the international system, including those that are channeled through the international organizations that have a greater impact on the priorities of the integration process, such as, among others, the World Trade Organization.

There are three issues that seem to be among the most relevant for Mercosur's 2021 agenda and, therefore, for the agenda of each of its member countries. These issues are relevant because of their simultaneous impact on the political, economic and legal dimensions that we consider essential to understand Mercosur's development. As we have pointed out in other opportunities, these are dimensions that, from the founding stage, have been key to interpreting the logic of the behavior of its member countries (and even of countries that chose not to formally join Mercosur, as is the case of Chile). Addressing an integration process such as that of Mercosur from only one of these three perspectives involves the risk of not being able to correctly interpret realities and, therefore, of formulating erroneous diagnoses about them. This means running the additional risk of not understanding the realities at all and, above all, of not being able to identify actions that may be aimed at having an impact on them. In other words, the risk that whatever is finally decided ends up being ineffective and inefficient.

A first issue to be addressed is the idea of providing Mercosur with greater flexibility to face trade negotiations with other countries or groups of countries, through multiple types of cooperation agreements.

The second issue is the participation of Mercosur countries in actions aimed at making the multilateral trade system, currently institutionalized in the WTO, more effective.

And the third issue is that of the links to be established with other regions organized through different types of integration and economic cooperation agreements, such as, among others, the EU and the regional agreements in Asia; the recently created Regional Comprehensive Economic Partnership - RCEP (refer to the December 2020 issue of this newsletter), or in Africa, the possible developments of the African Union agreement, which brings together 55 African countries and contemplates the articulation of their regional economic communities. (See the "African Union Handbook", Addi Ababa - Ethiopia and Wellington, New Zealand, 2019).

The first issue is aimed at addressing what is implied by the often heard expression that "Mercosur binds us". In other words, that being a member of Mercosur, a country faces restrictions in its possibility of developing and concluding individual trade negotiations with one or more other countries. This explains the recurrent proposals aimed at making Mercosur more flexible by opening the horizon for possible trade negotiations that do not require the participation of all its member countries. This restriction is due mainly to the fact that Mercosur has opted for the formula of a customs union instead of a free trade zone.

However, as we have already pointed out in other opportunities, such restriction does not derive from Decision 32-00 of the Mercosur Council of the year 2000, as it has often been stated. On the contrary, it derives from different elements included in the Treaty of Asuncion itself, referring to the objective of "building a Common Market"and, especially, from its second article, which stipulates that "the Common Market shall be based on the reciprocity of rights and obligations among the Party States". This rule was probably not an accident. Perhaps it had much to do with a central concern for the political leadership of that time -especially in Argentina and Brazil -which was the possibility that one of the Mercosur members would later opt for a preferential trade alliance with the United States, whose government had just formally launched, in 1989, the idea of a vast free trade zone of the Americas, which could even be built through the individual incorporation of interested countries. Precisely because Chile did not join Mercosur, it was able to sign a free trade agreement with the United States.

If this interpretation is correct -and this is at least our understanding- making Mercosur more flexible in order to allow member countries to individually conclude preferential trade agreements with third countries or groups of countries would require modifying the Treaty of Asuncion, and especially its first, second and fifth articles. If this were not seen as convenient or possible, another option would be for the country or countries interested in such a gain in flexibility to withdraw from Mercosur. We could call this the "Brexit" option. And a third option would be to resort to article 47 of the Ouro Preto Protocol and convene a diplomatic conference that could review the institutional structure of Mercosur with regards to the competences to make the assumed commitments more flexible. (On this topic, see our article in the Foreign Trade Supplement of "La Nación" newspaper of May 14, 2020).

The second issue refers to Mercosur and the multilateral system of international trade institutionalized in the WTO. The appointment, on February 15, of Ngozi Okonjo Iweala as Director General of the WTO has resolved one of the factors that generated uncertainty about the future effectiveness of the main institution of the international trading system. (See her profile and background at www.wto.org). Her broad and rich governmental experience in her own country, Nigeria, and at the international level, especially at the World Bank, and more recently as Chairman of the Board of Gavi -the Vaccine Alliance- may allow us to anticipate a period characterized by the effectiveness of her management at the helm of the WTO.

The WTO has therefore entered a stage where it will try to activate its role in relation to a system of trade negotiations that will require a great deal of effort to overcome the relative paralysis that has characterized it in recent years.

Two work fronts, among others, stand out in the WTO's current agenda. On the one hand, its role in promoting multilateral trade negotiations, which was partly affected by the Doha Round experience. On the other, and no less important, is to restore the effectiveness of its dispute settlement mechanism, which was impacted by, among other factors, the position taken by the administration of President Donald Trump, which led to a stage of relative stagnation that has not yet been overcome.

The Latin American countries, first members of GATT and now of the WTO, have always sought to play an active role by frequently promoting initiatives. Activating such protagonism should be a priority for the Latin American group, which can be increased to the extent that the capacity for joint action is strengthened, especially by the countries of Mercosur and the Pacific Alliance, which have a long tradition of promoting the agendas of the multilateral trade system and, in particular, of the WTO.

The third issue is related to Mercosur's agenda for the articulation with other regional cooperation initiatives that have an impact on the international trading system. This certainly entails intensifying the coordination and joint work with other regional integration and cooperation schemes in Latin America itself, such as, among others, the Latin American Integration Association (LAIA), the Pacific Alliance, the Andean Community, the Central American Integration System and the Central American Common Market itself, and the Caribbean Community. The recent appointment of Sergio Abreu as Secretary General of LAIA has opened new horizons for the idea of making this organization a forum for initiatives that facilitate the promotion of regional integration, with an impact on the joint participation of the region in the broad and diverse front of international trade negotiations.

Above all, however, it implies that the countries of the region play an active role in the articulation with other relevant regions for the development of global international trade. Without excluding other fronts -including those that may eventually be developed with major players in current and future international trade (such as China, the US and India) -Mercosur will have to give immediate priority to the agreements that have been negotiated with the EU and that could be negotiated with the RCEP. Other relevant fronts are the relations that will develop with the United Kingdom after Brexit. (See the February 2021 issue of this newsletter).

The intense agenda of international trade negotiations, both in Mercosur and in the Latin American region, makes it more necessary than ever to ensure the active participation of academic institutions in the process of analysis and generation of action-oriented ideas. The development of approaches and concrete ideas that facilitate the projection of the existing capacities in the Latin American region to the world will be an important factor for the development of successful and efficient strategies for the international trade insertion of the countries of the region. (On this subject, see the November 2020 issue of this newsletter).

In this respect, it is worth mentioning, as a contribution to the conception and development of an international trade insertion strategy for Latin American countries, the Second Congress of the Regional Group for Integration and Development of Latin America and Europe (GRIDALE), which will be held in virtual mode, in Buenos Aires, from March 8 of this year. GRIDALE is an initiative of the Universidad Cooperativa de Colombia and is coordinated by Edgar Vieira Posada, who has a long career in the public sector in his country and in the Andean Group, as well as in academia. GRIDALE'S first Congress took place in Bogota in 2018. The Buenos Aires event is jointly organized by GRIDALE and Universidad Nacional de Tres de Febrero. (For more information about GRIDALE, and its activities, including the Congresses of Bogota (2018) and Buenos Aires (2021) and its publications, see http://www.gridale.org).


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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