THE CONSTRUCTION OF THE NECESSARY CONSENSUS:
Is it a real weak point for the future functioning of Mercosur?
by Félix Peña
English translation: Isabel Romero Carranza
In other opportunities we have dealt with different
aspects of the debate that is taking place within Mercosur regarding its
future and, in particular, what can be called its "methodological
crisis". This is a crisis not so much concerning the existential
dimension of Mercosur, but rather about how to develop the idea of working
together, both in the area of economic and social development, as well
as in the area of international insertion, especially in terms of trade
(see in this regard, our newsletter from June and August of this year).
A recent event is giving special relevance to this
debate. It is the statement made by Paulo Guedes, Brazil's Minister of
Economy, when he spoke, "remotely", at the event called "Brazil
Wants More", organized by the International Chamber of Commerce.
In his presentation, Minister Guedes referred, in
particular, to Brazil's position in relation to the reduction of the common
external tariff and to the way decisions are taken in Mercosur, especially
with regard to the negotiation of preferential trade agreements with third
The uncertainties regarding Mercosur as an attractive
environment for new productive investments are many and diverse. The flexibility
for member countries to enter into different types of preferential trade
agreements with other countries would be only one of the aspects of Mercosur's
functioning that requires priority attention. What is important, therefore,
would be a simultaneous approach to the set of issues that would eventually
involve changes to what was agreed 30 years ago.
In order to facilitate a rational debate among the
partner countries, with a broad participation of citizens in all their
diversity, it seems advisable to keep in mind some of the main issues
outlined in recent newsletters and that could require building the necessary
consensus regarding Mercosur.
On recent occasions we have addressed in this newsletter different aspects
of the debate that is taking place in Mercosur in relation to what can
be called its "methodological crisis". This crisis is not so
much about the existential dimension of Mercosur, but about how to develop
the idea of working together, both in terms of economic and social development,
and in terms of the international integration, especially in trade (see
in this regard, among others, our newsletters of June and August of this
A recent event is now giving a special significance to this debate. It
is the presentation made by Paulo Guedes, Brazil's Minister of Economy,
when he spoke "remotely" at
the event "Brazil Wants More", organized by the International
Chamber of Commerce, on September 27. (see https://.agenciabrasil.ebc.com.br/).
Among other considerations, Minister Guedes said that "the Brazilian
government seeks to modernize the economic bloc, but has encountered resistance
from Argentina...our position is to move forward...we will not abandon
Mercosur., but we will not accept Mercosur as an ideological tool. Mercosur
has a very clear purpose: it is a platform for integration in the global
economy. If it does not provide this service we will modernize it, and
those who are upset can leave...Brazil has proposed to reduce the common
external tariff by 10% for all products, while Argentina insists that
only a part of the goods be included in the reduction...we will stand
firm in our position...and Argentina seems to be very staunch in an antagonistic
position to ours...The disagreements also refer to the way decisions are
made.... Currently, all decisions are made by consensus among the four
member countries...Unanimity is required to make changes in Mercosur and
they turn them into vetoes...".
In his approach, Minister Guedes referred to Brazil's position with respect
to the reduction of the common external tariff and the way decisions are
made in Mercosur, especially with regard to the negotiation of preferential
trade agreements with third countries. Specifically, these are issues
that have to be addressed by decisions that require consensus of the four
member countries, as established by the Treaty of Asuncion (Article 16)
and the Protocol of Ouro Preto (Article 37). We should bear in mind that
when the Treaty of Asunción, which created Mercosur, was signed
on March 26, 1991, it explicitly opted for a customs union with a common
external tariff and joint negotiation with third countries, and not for
a free trade zone. Articles 1 and 5 of the Treaty contain the main elements
of the scope of the agreement between the member countries. And the core
idea of its scope 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 Party States"). Among other factors,
the regional context explains the inclusion of these elements in the adopted
commitment (especially the beginning of the U.S. initiative for free trade
agreements with countries from the Americas).
In order to facilitate a rational debate among the partner countries
and, to the extents that it is possible, to have a broad and diverse civil
participation, some of the following elements should be taken into account
in order to understand the necessary dialogue on Mercosur and its future:
- Although Mercosur includes as a central element a system of reciprocal
trade preferences, it also has basic political and economic dimensions
that run as deep or even deeper than trade preferences. They delve deeply
into the history of the relations between a group of Latin American
countries, which at times were more marked by a tendency to conflict
than to cooperation. And above all, it meant affirming the idea of working
together to promote an intelligent, effective and efficient international
insertion of each of the Mercosur member countries.
- More than thirty years after the signing of the Treaty of Asunción,
the elements that make up the existential dimension of Mercosur, in
other words, the reason for working together, are still fully valid.
Apparently, there is no questioning of the need for contiguous nations
that share their belonging to a region of strong potential and rich
diversity to work together to enhance their economic and social development,
strengthen their political systems, and achieve a competitive presence
in the international system that is functional to their interests and
- The most notorious differences can now be seen in the methodological
dimension, i.e., how to work together. These are usually natural differences
in any voluntary integration process between sovereign nations that
intend to remain so. On the contrary, the aim is to share the exercise
of their respective sovereignties without losing their individuality
- Once institutions and rules are created, they require collective
disciplines that enable the construction of the much valued integration.
- It is known from international experience that this construction
may take time, even more than was anticipated. Therefore, it may be
necessary to adapt the approximation steps to the agreed objectives.
The path towards the desired goals may require frequent adaptations.
The recent European experience has been very telling in this regard.
- However, 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 of reality, both in participating countries
and in the regional and global environment in which they are embedded.
On the contrary, the real problems usually stem from the shortcomings
of the methods used to redirect the course of the outlined path or to
revise it when the force of reality makes it necessary.
- Such problems may even reveal shortcomings and inadequacies in the
methods used to reach joint decisions or to ensure their implementation.
Or they may reveal deficiencies in the formulation of each country's
position in relation to the challenges arising from the changing environment.
They may also result, among other things, from a poor understanding
of the new realities, which may originate either from governmental actors,
from the business sector itself, or from the multiple and diverse social
- 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 flaws in the diagnosis of what is wrong with an integration
- 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 integration process. This is what happened in
the experience of the United Kingdom in the European Union. Methodological
failings can be solved with modifications to the agreed common rules
and regulations, including, if necessary, those of the constituent pact
- From the perspective of the above, it is very important for an integration
process such as Mercosur to make a correct assessment of its practical
difficulties in navigating a world which is undergoing a continuous
process of change. It is a diagnosis that requires taking into account
both the national perspective of each of the countries participating
in the process and the common perspective as understood from the integration
process itself, in this case, from Mercosur. These diagnoses highlight
the intensity and quality of the interaction among the multiple actors
involved, including, in particular, the contribution of the action-oriented
- Assuming that the diagnoses are correct, this would certainly not
be enough. What is really required to face methodological crises in
an integration process, especially if they have the potential to lead
to existential crises, are effective and efficient mechanisms for the
alignment of national interests in accordance with the interests perceived
as common. This implies, above all, political leadership at the highest
level of the countries involved, the capacity for coordination within
the main common body of the integration process, and most importantly,
an active involvement of the respective multiple economic and social
- The critical moments of integration processes, such as the experiences
of the European Union and Mercosur, reveal that the main elements of
an effective integration methodology, which makes it possible to achieve
the desired objectives and, at the same time, avoid the recurrence of
existential crises, lie in the consensus-building capacity of the main
common body and in the quality of the political leadership of the member
- In view of the above, it is necessary to highlight three relevant
issues to modernize Mercosur and restore an adequate degree of credibility
and efficiency. Actually, these issues are directly dependent on human
- The first issue relates to the methodologies for opening up the
relevant markets and the impact this has on international trade
- The second refers to the institutional methodology applied for
the adoption of joint decisions -including the capacity to perform
the necessary function of coordinating the national interests- that
also impact the development of the agenda of trade negotiations
with other countries, and
- The third refers to the methodology used to ensure that the integration
process is based on, and therefore guided by, common ground rules.
Of course, there are other relevant issues to be addressed, the three
that we have just mentioned are those that, after almost thirty years
of Mercosur's development, would be advisable to keep in mind, especially
in the discussions at the highest political level.
- In view of Mercosur's current problems (see, among others, the March
and April 2021 issues of our newsletter), at least three scenarios can
be contemplated as possible regarding its future development. Of course,
they are not the only ones, nor are they all desirable. Neither can
we rule out others that are difficult to imagine today, since globally
and in the Latin American region the conditions seem to be in place
for the development of unforeseen situations that may have an impact
on processes such as Mercosur. Uncertainty about its future is therefore
a dominant note that may be present for some time to come.
- A first possible scenario would be the reaffirmation of the main
commitments made when the Treaty of Asunción was signed,
i.e., understanding the customs union as the necessary basis for
the gradual construction of a common market. It would imply adjusting
many of the steps that would need to be taken in the future to achieve
this goal, which might even require agreeing on modifications or
complements to the Treaty of Asunción, but preserving the
fundamental features of a customs union and a common market.
This scenario is therefore in line with what, at least formally,
continue to be the cornerstones of the current Mercosur negotiating
agenda. Most importantly, it is a scenario in line with the original
idea that led to the Treaty of Asuncion. In our opinion, it is still
the most desirable and convenient scenario for the four member countries.
Because of the flexibility resulting from the agreed commitments,
it is a scenario that opens up many options as to how to achieve
the full development of its fundamental goals and also regarding
the deadlines for achieving them. It does not exclude the possibility
of differential treatment for some sectors, using one of the instruments
of the Treaty of Asunción -sectoral agreements-, or that
the specific situation of smaller countries and countries with a
lower degree of relative economic development be taken into account.
However, it explicitly excludes the possibility of a member country
seeking to negotiate, for example, bilateral preferential trade
agreements with third countries, especially those with larger markets,
that would contradict what was agreed in Mercosur. Specifically,
it excludes any policy aimed at "liquefying" the fundamental
trade commitments assumed by the members when Mercosur was created,
particularly in relation to the preservation of the preferences
- A second scenario would be that we have indeed reached a situation
that could be identified as "the beginning of the end of Mercosur",
at least in the sense of what was intended when the Treaty of Asuncion
was negotiated and signed in 1990-1991. It would be a scenario of
"liquation" of the commitments undertaken.
Specifically, at the time of the founding of Mercosur, it was considered
feasible and convenient to initiate a path towards the creation
and gradual development of a common market. To this end, the four
countries that created Mercosur explicitly committed themselves
to take the steps deemed necessary to make the elements of a customs
union a reality, as a basis for the construction of this common
market. Thirty years later, these steps have not been fully developed.
The customs union formally exists, even if it is far from being
perfected and, the commitment made in the Treaty of Asunción
However, what can be observed at present are signs that fuel doubts
as to whether the possibility or the will to comply with the commitments
really exist, at least in all member countries. At present, there
are no clear signs from any of the partners that they might eventually
choose to formally set aside the commitments made in the Treaty
of Asunción. But neither could we rule out behaviors that,
at least in practice, lead to "liquefy" what has been
agreed. This is to say, to introduce and legitimize elements that
would mean, in fact, casting aside the firm commitments established
in the Treaty, without formally modifying them. An example of this
might involve the scope granted to proposals aimed at making the
goal of a customs union more flexible in such a way that, in practice,
it is transformed into a free trade zone. In that case, each of
the member countries could eventually consider formally entering
into bilateral preferential trade agreements with third countries,
especially those with larger markets, such as the United States,
China or Japan, to name a few. This is instead of pursuing the initiative
of preferential trade negotiations that Mercosur formally develops
with the world's major economies, including China and the USA, as
was done when negotiating the not yet concluded agreement with the
- A third scenario would be that of a country opting to withdraw
from Mercosur, as is explicitly provided for in Articles 21 and
22 of the Treaty of Asunción. Given the size of their markets,
it would be difficult to imagine that Mercosur could survive as
a credible and relevant project if either Brazil or Argentina, or
eventually both, decided to denounce the Treaty. Nothing would indicate
that such a scenario is today being explicitly contemplated by any
of the partners, but it would be equally unreasonable to rule it
out as a possibility.
The current uncertainties in relation to Mercosur as an appealing environment
for new productive investments, are many and varied. That there are many
should not be surprising, since the new international environment --and
not only as the result of the current pandemic- has increased the degree
of uncertainty with respect to many economies, especially developing ones
and not only those of Mercosur or Latin America. Nor should it be surprising
that they are varied, since they often have political or economic roots,
and in many cases, both at the same time.
The flexibility for member countries to engage in different forms of
preferential trade agreements with other countries would be only one of
the aspects of Mercosur's functioning that require priority attention.
What would be important, therefore, would be a simultaneous approach to
the set of issues that would eventually imply modifications to what was
agreed 30 years ago.
In addition to the above issues, other relevant ones are now on the Mercosur
agenda and will require, sooner rather than later, an approach at the
highest political level. One of these refers to the joint proposals made
by the industrialists of the four countries, which involves the development
of policies to help transition from primary economies to the manufacture
of intelligent products with added value and, at the same time, to enable
the insertion of their companies in transnational trade and productive
investment networks. This would imply placing in this perspective the
issue of trade negotiations to be developed by Mercosur (see the July
2021 edition of our newsletter).
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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