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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
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CHALLENGES FACED IN INTEGRATION PROCESSES
A view from the perspective of Latin American countries.


by Félix Peña
February 2022

English translation: Isabel Romero Carranza


 

In other opportunities we have addressed the issue of the different modalities of joint work between nations in the sphere of international trade, especially if they are developed in the context of integration and cooperation processes within the institutional framework of the WTO.

This is a question that has acquired greater relevance in light of the often serious challenges that we are observing today at the global level and in the different geographic regions in which international competition is developing through the processes of economic integration. These are challenges that sometimes exceed the economic aspect and often penetrate deeply in the political and strategic spheres by bringing into play the power relations between nations and even within nations themselves. They remind us of other historical moments in which conflicts between countries belonging to contiguous geographic regions led to war.

In recent decades, some of the experiences of joint and institutionalized work between contiguous nations originated, precisely, as a way of overcoming existing collision courses between relevant players in the same region. This was certainly the case of the process that finally led to the creation of the European Union and, to a certain degree, also the case of the origins of Mercosur.

Three methodological issues seem to be the most relevant so that, depending on how they are addressed, the current trend towards the possible irrelevance of Mercosur can be reversed. These are: the methods for opening the respective markets and their impact on international trade negotiations; the institutional methodologies applied for the adoption of joint decisions that translate into legal commitments; and the ones used to ensure that an integration process is effectively guided by common rules.

But to render a debate on Mercosur more engaging, it would be necessary to insert it into a broader debate on the development of effective and efficient methods for regional cooperation, which would make it possible to harness all the institutional potential developed in the Latin American region and in its sub-regions (South America, Central America and the Caribbean.


At present, economic integration processes face complex challenges. This is undoubtedly the case of Mercosur. At the same time, innovative methodologies are emerging in the joint work between nations of the same geographic region. In Asia-Pacific, for example, this is the case with the Regional Comprehensive Economic Partnership (RCEP), to which we have referred in our January newsletter.

On previous occasions, we have addressed the issue of the different modalities of joint work between nations, especially if they are developed through integration and cooperation processes within the institutional scope of the WTO and, therefore, of its rules (see our May 2021 newsletter).

This is an issue that has acquired greater relevance in light of the challenges observed today in the different geographic regions in which international competition is developing through the processes of economic integration and cooperation. These are challenges that often exceed the economic dimension and, at times, even penetrate deeply into the political and strategic spheres by bringing into play the power relations between nations and even within nations themselves.

These challenges are reminiscent mostly of other historical times, when conflicts between countries belonging to contiguous geographic regions led to war. This was the case of the developments that took place during the twenty years between the end of World War I and the beginning of World War II (1918-1939).

It is a historical precedent that requires much attention today because it can teach us something about the characteristics of the present time. It is noteworthy because of the effects produced by changes in the distribution of world power, especially in the degree of concentration of relative power among the main nations, and because of the impacts produced by technological changes.

It is worth bearing in mind that, in recent decades, some of the experiences of joint and institutionalized work between contiguous nations originated, precisely, as a way of overcoming ongoing collision courses between relevant players in the same region.

In this regard, the most notable case is the beginning of the process that led to the creation of the present European Union through the introduction of the Schumann Plan. The Frenchman Jean Monnet, who inspired and played a key role in the whole process, was clear about the potential risks of an international and European situation that could, once again, affect relations between Germany and France, in the context of the already evident clash course that had started to develop between the United States and the Soviet Union.

Monnet did not have academic studies but, as a businessman and for family reasons, was knowledgeable of the international realities (for his biography, thoughts and contributions, see his "Memoirs" written at the end of his intense life, at the age of ninety. For more on Monnet, refer to our October 2019 newsletter and the bibliography recommended in it). Jean Monnet-together with Robert Schumann and Konrad Adenauer, among others-played a decisive role in the conception of approaches that continue to have great validity in today's international realities such as "de facto solidarities", "pooling of resources", "working together", and "common institutions and rules".

These are approaches that were also involved, although with huge differences, in the process that led to the reversal of the collision course between Argentina and Brazil, and which, under the political leadership of Presidents Raúl Alfonsín and José Sarney, among others, led to the initiation of the integration process that was later -and still is -expressed in the process called Mercosur.

In practice, these are approaches that are often more relevant to understanding how to address integration processes between nations than those that can be derived only from concepts and categories coming, for example, from economic theory.

In South America, processes such as those being developed in Mercosur and the Pacific Alliance are also easier for their citizens to understand -with the previously mentioned approaches and, in particular, with the "working together" approach.

On the contrary, in the language of international negotiations, the concepts of "free trade zone" and "customs union" have a technical connotation that makes them more precise for the formal commitments that are adopted, but not necessarily when it comes to making citizens understand their real scope.

It is precisely Mercosur that is currently undergoing conceptual debates that may not be easy for the general public to understand. These debates require a good command of the theoretical aspects of what is supposed to be an economic integration process that is effective, efficient and credible for each participating country and, above all, for its own citizens.

In this regard, three methodological issues seem to be the most relevant so that, depending on how they are addressed, the current trend towards Mercosur's irrelevance may be reversed (on these trend see, among others, the publication by Marcela Cristini and Guillermo Bermudez, mentioned below as recommended reading).

Such methodological issues are: those employed for opening up the respective markets and their impact on international trade negotiations; the institutional ones applied for the adoption of joint decisions that translate into legal commitments; and those used to ensure that the integration process is effectively guided by common rules.

But, above all, in order to make the necessary debate on the future of Mercosur more accessible, it would be necessary to insert it into a broader debate on the development of methodologies that would help harness all the institutional potential that has been developed in the Latin American region and in its different sub-regions, such as South America, Central America and the Caribbean.

It will also require, as we have pointed out on other occasions, tapping the full potential of LAIA, including its instrument of partial scope agreements.

In addition, it will require taking full advantage of the recent Asia-Pacific experience in the process that led to the conclusion of the RCEP negotiations (on the RCEP, see the December 2019 and January 2022 editions of our newsletter, including their bibliographical and documentary references).

The issue of the regime of origin in the RCEP and its link with production chains of regional and global scope will require particular attention. We will return to this relevant issue at a later date.


Recommended Reading:


  • Bagwell, Kyle W.; Mavroidis, Petros C. (editors), "Preferential Trade Agreements. A Law and Economic Analysis", Cambridge University Press, Cambridge-New York 2011.
  • Bergoglio, Jorge; Skorka, Abraham, "Sobre el cielo y la tierra", Sudamericana, Buenos Aires 2013.
  • Bhala, Raj, "Modern GATT Law. A Treatise on the General Agreement on Tariffs and Trade", Swett & Maxwell, 2005.
  • Chalmers, David J., "Reality + Virtual Worlds and the Problems of Philosophy", W.W.Norton & Company, New York 2022.
  • Clark, Ian, "Globalization and Fragmentation. International Relations in the Twentieth Century", Oxford University Press, Oxford-New York 1997.
  • Condliffe, J.B., "The Commerce of Nations", W.W.Norton & Company, New York 1950.
  • Crete, Willems, "Revitalizing the World Trade Organization", Atlantic Geoeconomics Center, October 2020.
  • Cristini, Marcela; Bermudez, Guillermo, "El Mercosur en riesgo", FIEL - Infobae - Buenos Aires 29-01-2022.
  • Dunkley, Graham, "The Free Trade Adventure. The WTO, the Uruguay Round and Globalism", Zed Books, London and New York 2000.
  • Fawcett, Louise; Hurrell, Andrew (editors), "Regionalism in World Politics. Regional Organization and International Order", Oxford University Press, Oxford - New York 2003.
  • Geiger, Till; Kennedy, Dennis (editors), Regional Trade Blocs, Multilateralism and the GATT", Pinter A. Cassell Imprint, London - New York 1996.
  • Harris, Seymour E., "Problemas Económicos de América Latina", Fondo de Cultura Económica, México 1945.
  • Henderson, W.O., "The Zollverein", Cambridge University Press, Cambridge 2013.
  • Hosli, Madeleine O.; Selleslaghs, Joren (editors), "The Changing Global Order. Challenges and Prospects", United Nations University Series on Regionalism, Springer, 2020.
  • Jaguaribe, Anna, "Brasil-China - Ensaios 2002-2021", Paula Carvalho (organizara), CEBRI, Rio de Janeiro 2021.
  • Kenwood A.G.; Lougheed, A.L. "The Growth of the International Economy, 1820-1980. An Introductory Text", George Allen & Unwin, London -Boston 1983.
  • Kolsky Lewis, Meredith; Nakagawa, Junji; Neuwirth, Rostam J.; Picker, Colin B.; Tobias Stoll, Peter (editors), "A Post-WTO International Legal Order. Utopian, Dystopian and Ocher Scenarios", Springer Nature Switzerland AG 2020.
  • Mafla, José Francisco; Bernate, Juan Camilo, "La acumulación de origen como flexibilización de las reglas de origen tradicionales", Revista Instituto Colombiano de Derecho Tributario, Bogotá 2015, www.icdt.co/publicación/revisyas/revista74.
  • Martinez, Gabriela, "La acumulación de origen de procesos productivos", ALADI/SEC/Estudio 215, Montevideo. Mayo 31, 2012
  • Nakada, Minoru, "A OMC e o Regionalismo", Aduaneiras, Sao Paulo, 2002.
  • Oddone, Nahuel, "Articulación productiva y cadenas regionales de valor. Una propuesta metodológica para la región SICA", CEPAL; México, September 2018.
  • Peña, Félix, "Un acuerdo abre una nueva etapa en las relaciones comerciales internacionales", Suplemento Comercio Exterior - La Nación, Enero 27, 2022.
  • Plantey, Alain, "La Négociation Internationale au XXIe Siècle", CNRS Editions, Paris 2002.
  • Rock, David (compilador), "Argentina en el Siglo Veinte, Economía y desarrollo político desde la élite conservadora a Perón-Perón", Letra Gamma - Lenguaje claro, Buenos Aires 2009.
  • Schenoni, Luis; Malamud Andrés, "Sobre la creciente irrelevancia de América Latina", Revista Nueva Sociedad n° 291, Enero-Febrero 2021.
  • Schiff, Maurice; Winters, L.Alan, "Regional Integration and Development", The World Bank, Washington D.C 2003.
  • Steil, Benn, "The Battle of Bretton Woods. John Maynard Keynes, Harry Dexter White, and the Making of a New World Order", Princeton University Press, Princeton 2013.
  • van de Heetkamp, Anne; Tusveld, Ruud, "Origin Management. Rules of Origin in Free Trade Agreements", Springer,-Verlag Berlin Heidelberg 2011.

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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