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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
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HAS THE TIME COME TO MODIFY THE TREATY OF ASUNCIÓN?
Options for adapting Mercosur to the new global and regional realities


by Félix Peña
August 2021

English translation: Isabel Romero Carranza


 

Thirty years after the signing of the Treaty of Asunción, the elements that comprise the existential dimension of Mercosur, in other words, the reason why to cooperate, are still valid. The need for this group of adjoining nations belonging to a region with strong potential and great diversity, to work together towards advancing their economic and social development, strengthening their political systems and achieving an inclusion in the international system that is functional to their interests and possibilities, is not being questioned.

The actual differences arise with regard to the methodological dimension, or how to work together. These are natural differences in any voluntary integration process between sovereign nations that wish to remain so. In fact, the objective is to share the exercise of their sovereignty without losing their individuality as nations.

The problems do not stem from the need for a continuous adaptation of a voluntary integration process between nations and its existential narrative to the frequent changes in realities, both in the participating countries and in the regional and global environment in which they are inserted. Rather, the real problems may result from the shortcomings of the methods used to eventually redirect the path laid out or to adjust it when necessary due to the impact of those realities.

If a country perceives serious difficulties in introducing modifications in the methodological dimension and considers that this could affect its national interests, it always has the existential option of withdrawing from the corresponding integration process.

Methodological deficiencies can be resolved with modifications to the agreed common rules and practices, including, if necessary, those of the articles of incorporation of the original pact.

In an integration process such as Mercosur's, a good diagnosis of its practical difficulties in navigating a world in a continuous process of change is of utmost importance.


When the Treaty of Asunción, that created Mercosur, was signed on March 26, 1991, the essence of the agreement was reflected in the conditions for reciprocity of trade preferences granted to each other by the member countries and, in particular, those of the two main economies of the regional integration area that was being created.
.
A customs union, rather than a free trade zone, was explicitly chosen. Articles 1 and 5 of the Treaty contain the main elements of the pact between the partner countries. However, the central idea of the scope of the pact is reflected in Article 2, which establishes reciprocity as the main commitment ("The Common Market shall be based on reciprocity of rights and obligations among the States Parties").

But although a system of reciprocal trade preferences was created, Mercosur has basic political and economic dimensions that are as profound, if not more so, than trade preferences. They run deep in the history of the relations between a group of Latin American countries, which were sometimes characterized more by a tendency towards conflict than cooperation. Above all, it implied affirming the idea of working together to promote the intelligent, effective and efficient international insertion of each of the Mercosur member countries.

Thirty years after the signing of the Treaty of Asunción, the elements that define the existential dimension of Mercosur, in other words, why work together, are still fully valid. The need for neighboring nations that share a common region of high potential and rich diversities to work together with the aim of enhancing their economic and social development, strengthening their political systems, and achieving a competitive insertion in the international system that is truly functional to their interests and possibilities is not being questioned.

The most striking differences can be seen in the methodological dimension, i.e., how to work together. These are usually natural differences that occur in any voluntary integration process between sovereign nations that wish to remain so. Indeed, the objective is to share the exercise of their own sovereignty without losing their individuality as nations.

When institutions and rules are created, they imply collective disciplines that allow for the construction of the desired integration to be carried out. It is known from international experience that such construction may take time, even more than imagined. Hence, it may be necessary to adapt the approximation steps to the agreed objectives. The path towards the goals pursued may require frequent adaptations. The recent European experience has been very illustrative in this regard.

The problems do not stem from the need for continuous adaptation of a voluntary integration process between nations and its narrative to the frequent changes in the realities, both in the participating countries and in the regional and global environment in which they are inserted. On the contrary, the real problems usually result from the shortcomings of the methods used to eventually redirect the course taken or to adjust it as necessary to the changing realities.

Such problems may even reveal flaws in the methods used to reach joint decisions or to ensure their implementation. Or they may reveal deficiencies in the elaboration of the corresponding national positions with relation to the challenges arising from the evolving context. They may also result, among other factors, from shortcomings in the diagnoses of such scenarios, which may originate either from governmental actors, from the business sector itself, or from the many and diverse social sectors.

Methodological shortcomings have more complex effects if they translate into existential differences. In a way, this is one of the lessons that can be drawn from Brexit, at least from the perspective of those who promoted it. This can happen, for example, when it is considered that there are failures in the diagnosis of what is wrong with an integration process.

If a country perceives difficulties in introducing modifications in the methodological dimension and considers that this may affect its national interests, it always has the existential option of withdrawing from the corresponding integration process. This is what happened with the UK's experience in the EU.

Methodological deficiencies can be resolved with modifications to the agreed common rules and procedures, including, if necessary, those of the articles of incorporation of the constituent pact.

From the perspective of the above, it is very important for an integration process such as Mercosur to make an accurate diagnosis of its practical difficulties when navigating an ever-changing world. It requires taking into account both the national perspective of each of the countries participating in the process and the collective perspective of the integration process itself, in this case, Mercosur. It is through these diagnoses that the intensity and quality of the interaction between the multiple actors involved, including, in particular, the contribution of the action-oriented think tanks, becomes evident.

Assuming that the diagnoses were correct, this would certainly not be enough. What is actually required to face methodological crises in an integration process, especially if they have the potential to result in existential crises, are effective mechanisms for the coordination of individual national interests with those interests that are perceived as being common to all. This implies, foremost, political leadership at the highest level in all the participating countries, the capacity for consensus-building within the main governing body of the integration process, and, especially, an active role of the multiple economic and social sectors involved.

The critical moments of integration processes, such as those seen in the different experiences of the EU and Mercosur, show that it is in the capacity for coordination of the main common governing body and in the quality of the political leadership of the member countries that lie the main drivers for an effective integration methodology that helps achieve the desired goals and, at the same time, avoids the recurrence or victory of any existential crises.

In view of the above, it is important to highlight three relevant issues that would help to modernize Mercosur and restore an acceptable degree of its credibility and effectiveness. In fact, these issues are directly dependent on human factors.

The first issue refers to the methodologies for opening up the respective markets and their impact on international trade negotiations. The second issue relates to the institutional methodology -including the capacity to exercise the necessary function of coordination of national interests- applied for the adoption of joint decisions, which also have an impact on the development of the agenda of trade negotiations with other countries. Finally, the third issue concerns the methodology used to ensure that the integration process is based and, therefore guided, by shared ground rules.

There are certainly other relevant issues to be addressed however the three mentioned above are those that, after almost thirty years of Mercosur's development, would seem advisable to keep in mind, especially in conversations at the highest political level.


Recommended Reading:


  • Acharya, Rohini, "Regional Trade Agreements and the Multilateral Trading System", Cambridge University Press, Cambridge 2016.
  • Actiz, Esteban; Malacalza, Bernabé, "Las políticas exteriores de América Latina en tiempo de autonomía líquida", Nueva Sociedad 291, enero-febrero 2021.
  • Chaguaceda, Armando; Pedrosa, Fernando, "Entre la geopolítica y las ideas. Reflexiones para una renovación democrática", DP Enfoques, GAPAC nro. 5, Fundación Konrad Adenauer, Montevideo 2021.
  • Consani, Norberto; Rial, Juan Alberto, "La creación de la ABACC: un ejemplo de Argentina y Brasil al mundo", en Opiniones en el IRI - Julio 2021 - Instituto de Relaciones Internacionales - Universidad Nacional de la Plata,
  • Fernandez, Nelson, "El futuro del Mercosur. Una discusión de 200 años", en "La Nación", Sección Opinión, 23 de Julio 2021, página 31.
  • Fernandez Reyes, Jorge, "El "relacionamiento externo" del Mercosur", Estudios del CURI Estudios del CURI, Montevideo 5 de febrero 2015.
  • Gregorio-Cernadas, Maximiliano, "Una épica de la paz. La política de seguridad externa de Alfonsin", EUDEBA, Buenos Aires, Junio 2016.
  • Grogoubinsky, Dmitry, "Searching for leadership for the 12th WTO Ministerial Conference", East Asia Forum, 12 July 2021, http://www.eastasiaforum.org.
  • Hewitt, Joanna, "Could restarting agricultural negotiations save Doha?", East Asia Forum, 7 July 2021, http://www.eastasiaforum.org.
  • Liang. Yan, "Can the G7 really build back a better world?", East Asia Forum, 24 July 2021, http://www.eastasiaforum.org.
  • Liang, Yan, "Biden needs to end the tariff war with China", East Asia Forum, 2 July 2021, http://www.eastasiaforum.org.
  • Loro Horta, Dili, "Why China wants to power Argentina's air force modernization?", East Asia Forum, 10 July 2021, www.eastasiaforum.org.
  • Lucángelis, Jorge, "La flexibilización del Mercosur", Alquimias Económicas, 8 de julio 2021, en http://www.alguimiaseconómicas/2021/07/08/la-flexibilización-del-mercosur/
  • Mallea, Rodrigo; Spektor, Matías; Wheeler, Nicholas J. (editors), "The origin of nuclear cooperation. A critical oral history of Argentina and Brazil", Wilson Center - ICCS - FGV, Rio de Janeiro, March 2012.
  • Merke, Federico; Stuenkel, Oliver; Feldmann, Andres E., "Reimagining Regional Governance in Latin America", Carnegie Endowment for International Peace, Washington DC, 2021.
  • Paz, Gonzalo S., "Putin y la nueva visión rusa del mundo en 2021", en "La Nación", sección opinión, 26 de julio 2021.
  • Peña, Félix, "Reflexiones sobre la situación actual del Mercosur y sus dificultades", Suplemento Comercio Exterior de "La Nación", 22 de Julio 2021, página 3.
  • Peña, Félix, "Aportes a un debate sobre el futuro de la integración latinoamericana y del Mercosur, Revista Relaciones Internacionales, UNLP 30 (60) 122, en https://doi.org/10.24215/23242766e122.
  • Perotti, Alejandro, "El artículo 2° del Tratado de Asunción ¿Existe un derecho a violar el derecho?", en Derecho Vigente del Mercosur- La Ley - BsAs 2001.
  • Piñeiro, Martín, "La flexibilización del Mercosur: reflexión sobre su conveniencia y oportunidad", CARI, Documento de trabajo 107,Julio 2021, en http://www.cari.org.ar.
  • Rolland, Sonia E.; Trubek, David M., "Emerging Powers in the International Economic Order. Cooperation, Competition and Transformation", Cambridge University Press, Cambridge - New York, 2019.
  • Roca, Mariano, "Hacia dónde va la integración regional?", DEF, 138/Año XV, páginas 92-97, http://www.defonline.com.ar.
  • Van Jackson, Victoria. "Time for US nuclear strategy to embrace no first use", East Asia Forum, 4 July 2021, http://www.eastasiaforum.org.
  • Zeying, Wu, "What lies behind China's nationalism and growth?", East Asia Forum, 15 July 2021, http://www.eastasiaforum.org

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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