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  Félix Peña

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Comments and reflections that may be useful when addressing the future of Mercosur

por Félix Peña
December 2022


In this opportunity, comments and reflections will be made on the issue of Mercosur's flexibilization and the negotiation of the Mercosur-EU association agreement.

These are contributions that may be useful for the approach of an ambitious strategy for Mercosur trade negotiations with a wide range of developed and emerging countries. Such a strategy should include, from the outset, the negotiation of the so-called preferential free trade agreements with the world's main markets (especially the US and China) and the completion of the negotiation process of the still pending agreement with the EU.

The new government of President Lula da Silva opens the possibility of strengthening the strategic idea of Mercosur and updating the working methods to be used in its development. Likewise, conditions are favorable for the goal of reaching an association agreement between Mercosur and the European Union within a reasonable timeframe, under conditions that will allow it to be effective and efficient. Moreover, the recent analysis of Josep Borrell, member of the European Commission, on the reasons that drive the agreement between Mercosur and the EU, highlights the convenience for both parties to move forward in its completion (see the article from November 30, 2022 "Why Europe and Latin America Need Each Other" on

In this opportunity we will present some ideas on how to increase Mercosur's effectiveness as an institutional framework for joint work among its member countries and for the development of inter-regional agreements, including that with the EU. They are based on our contributions in the chapter (in Spanish) "Comentarios y sugerencias para la construcción de un Mercosur más eficaz y creíble", from the book (in Spanish) "30 años del Mercosur. Trayectorias, Flexibilización e Interregionalismo", coordinated by Gerardo Caetano and Diego Hernández Nilson, Department of Political Science, Faculty of Political Science. Universidad de la República, Montevideo 2022. The book is the result of the symposium organized in Montevideo on September 7, 8 and 9, 2021, by the University of the Republic (UDELAR) of Uruguay, the German Institute for Global and Regional Studies (GIGA) from Hamburg, the Carolina Foundation of Spain and the EU-LAC Foundation, headquartered in Hamburg. The entire book can be found on

One of the comments is related to the importance that should be attributed to the issue of preparing for the day after the entry into force of the bi-regional agreement. That is, the actions and policies that Mercosur countries would have to develop so that their companies are in a position to effectively benefit from the results of the negotiations. This is an issue where there is much to be learned from the EU experience in the preparation of its companies to take full advantage of the actual results of negotiations, through technical cooperation programs that help train SMEs so that they can be in a better position to benefit from the agreements that are concluded. It therefore makes sense to consider that being well prepared for "the day after" is as important, if not more, than being prepared to negotiate effectively. This is clearly an area in which the EU can contribute much of its experience to the Mercosur countries.

In principle, it can be argued that the idea of building Mercosur as an institutionalized space for joint work among its member countries would seem to require methodological innovations that take into account the experiences accumulated since its creation in 1991, both in terms of its aims and, above all, of the methods planned for joint work. The idea is not to do so with a dogmatic or theoretical perspective but to evaluate them in the light of the experience gained and the changes that have taken place in global and regional realities, and imagine solutions to the problems detected, in order to reach understandings under conditions of effectiveness and predictability to continue building the space for joint work.

In order to understand the debate on the methods of joint work and on the future of Mercosur, it seems advisable to go back to its early days. It is in their roots where we can find explanations of the course followed later by the international trade negotiations in which our country participates, both at the regional and global level, and particularly in the negotiations with the EU.

It is clear that the founding strategic idea was to form a customs union and a common market, in order to open up to the world and negotiate together with the US and the EU, and within the framework of ALADI. Additionally, Mercosur countries were placed in a position where they could take advantage of their potential trade relations with the Asian region, in view of the new international reality that involved the active insertion of China in global economic competition.

This approach was present from the very origin of the idea of transforming the bilateral integration process of the 1980s between Argentina and Brazil into one that was to include, among other South American countries, Chile, Paraguay and Uruguay. The fundamental strategic idea was clear: to deepen integration in order to create a regional environment that would be reliable and favorable for valuable internal processes -politically, for democracy; economically, for productive transformation; socially, for equity- and for the requirements of competitive insertion in the world and the attraction of investments that would allow the partners to be an active part of the internationalization of the world production of goods and services.

Mercosur then appeared as the backbone of the idea of a solid strategic alliance --open to the world- between the two main South American economies, which was later joined by Uruguay and Paraguay. Creating a common platform to compete and negotiate in the world was the purpose of the project launched in June 1990 in Buenos Aires, which was based on the progress achieved in the bilateral project between Argentina and Brazil (PICAB) initiated in 1986. The founding idea was, and still is, to constitute a "hard core" that would facilitate, through economic integration, the political stabilization and economic and social development of the entire South American space.

From the outset, two strategic ideas became interlinked. One was the creation of an integration area in the South of the Americas, open to the rest of the South American countries, and inserted in the Latin American context through ALADI, which included Mexico. The other was the joint insertion of Mercosur countries in the broader hemispheric free trade negotiations, an initiative launched at the beginning of 1990 by President Bush of the United States. This connection became even more evident at the Brasilia Ministerial Meeting (July 30 and August 1, 1990), in which, in addition to Brazil and Argentina, Uruguay and Chile participated. In it, the basic guidelines of the strategy to be followed were agreed: at the regional level, to form a customs union as a step towards a common market; at the hemispheric level, to negotiate together the still uncertain development of the American proposal. Paraguay, which had just started the path toward the institutionalization of its democracy, later joined the group. Chile, on the other hand, expressed its reasons for not participating, a position that was understood by the other countries.

These elements are added to the political definition of the original strategic idea --at least in its economic and commercial component- and are part and parcel of the founding negotiating package. They are, firstly, unrestricted access to the respective markets for all goods and, in a further instance, for services and other factors of production; secondly, a common external tariff that is functional to the opening of the respective markets to world trade; and thirdly, joint negotiations, including those with other LAIA partners and with the remaining countries of the international system, starting, at the time of its founding, with the USA and the EU.

These aspects reflect a core assumption of the original idea: macroeconomic coordination among the partners. Therefore, in the founding approach, Mercosur and hemispheric integration -together with the trade association with Europe-were conceived as two sides of the same coin.

At the same time, it is also clear from the founding moment that the associative pact was based on the idea that all members would be guaranteed access to a market of over two hundred million consumers, not only for goods but also for services, without precariousness or unilateral restrictions of any kind and without artificial distortions to relative competitiveness. This implied the development of collective macroeconomic, sectorial and external trade disciplines.

We understand that going back to the origins is advisable, since in many of the positions adopted today by significant protagonists -in favor or against the different options that may be proposed for the future-, there seems to be a tendency to underestimate the precedents that explain the commitments undertaken, or to confuse the sequence of events and their concatenation. At times, there even seems to be a propensity towards "zero reality", which would imply that these are processes devoid of history and that they are seemingly resetting themselves with the arrival of new government officials -whether they be policy-makers or negotiators-. Such discontinuity in the previously defined road map -not necessarily in response to the new realities- could affect the international credibility of Mercosur countries, drastically reducing the effectiveness of the common project in the stiff global competition for productive investments, and in its quality as a valid counterpart to address complex international trade negotiations. This may come at a high economic cost -although unnoticeable in the short term- by discouraging productive investments and industrial localization decisions.

Slightly over thirty years later, it seems to be a fact today that Mercosur is eager to be modernized, adapting its objectives and working methods to the current times and, above all, to those that can logically be imagined for the future. In fact, it is currently going through a delicate period in which its credibility is affected and even its survival is being challenged. The problems it faces are, to a large extent, the effects of changes that have taken place since its creation in 1991, both in the global and regional realities. They are also the result of economic and political difficulties that often affect the priorities of its member countries. However, they may also be the result of the working methods used in the joint actions of the members and, in particular, for the adoption of formal decisions that require consensus.

There are three options to face the problems confronting Mercosur today. Although feasible, their direct or indirect consequences could be very different:

  • A first option would be to recognize a certain degree of methodological obsolescence in Mercosur. If eventually a member country considered it advisable, it could gain independence through the denunciation of the Treaty of Asuncion, as provided for in articles 21 and 22 of chapter V;

  • The second option would be to undertake the process of making the necessary modifications to its main ground rules, including those of its founding treaties, and, in particular, to articles 1, 2 and 5 of the Treaty of Asuncion, among others. It is an option with uncertain deadlines and results, which could eventually have high and varying political costs in each country, especially because it would require the approval of the respective parliaments and it is common knowledge that this is not always possible in the political reality of a country; and

  • The third option would be for member countries to agree on policies aimed at taking full advantage of the current constitutive rules, without the need to resort to their potential modifications and without prejudice to the fact that it might even be advisable to promote new constitutive rules at a later date.

Within the framework of this third option, we have pointed out on other occasions that substantial improvements in the objectives and functioning of Mercosur could be attempted on at least three aspects. These improvements would not necessarily require reforms to the Treaty of Asunción or the Ouro Preto Protocol.

The first would be that of the coordination of national interests, which is necessary for the adoption by consensus of joint decisions of the Mercosur members that actually penetrate into reality and can be really effective. Concretely, what is proposed would be an initiative aimed at strengthening the functions of what is now known as the Administrative Secretariat, especially in relation to the process of technical preparation and the adoption of joint decisions that require the consensus of all the partners. The aim would thus be to strengthen its capacity to facilitate, with its contributions and initiatives, the complex task of coordinating the interests and priorities of each of the partners in the adoption of Council decisions requiring consensus.

This would not involve opening a debate on possible supranational powers of the Mercosur Secretariat, meaning functions that would imply that those who perform them would be considered to be above the national States. However, it would require granting the Secretariat the necessary technical and organizational capacity to facilitate the complex task of coordinating the various positions of the member countries, particularly involving decisions that must be adopted by consensus. Helping to build such consensus would then be a fundamental role of a strengthened Mercosur Secretariat.

This would also imply developing an active role of the Secretariat in setting up multinational networks of academic institutions and technical analysis, with the participation of specialists from member countries and from international organizations operating in the region, such as ECLAC, INTAL-IDB and, eventually, CAF. This is one of the fields in which ideas can be drawn from the varied and rich European experience, including the most recent with the countries of Eastern Europe and with countries in Asia and Africa within the framework of association agreements.

In principle, the Mercosur Secretariat already has an organizational format that would allow it to fulfill such a function. Strengthening its role in providing the experience, information and intelligence required to coordinate the diversity of interests and visions of its member countries, and thus achieve the necessary consensus for the adoption of its decisions, is a valuable aspect that may contribute to enhance Mercosur's role in the productive development and international insertion strategy of its member countries.

In this opportunity we will only enunciate the two remaining aspects. Firstly is that of the sector agreements provided for in the Treaty of Asuncion. This should be addressed together with the instrument of partial scope agreements, provided for in the 1980 Treaty of Montevideo that created LAIA, linking it with another relevant aspect of Mercosur's integration strategy, which is that of the joint action with the countries of the Pacific Alliance and with other countries of Latin America. The other aspect is the full incorporation into Mercosur's working agenda of issues that have gained greater relevance in recent times and, in particular, those related to climate change.

The three above mentioned aspects should be addressed simultaneously and through a strategy of trade negotiations with a range of developed and developing countries. This strategy should include, from the outset, the negotiation of so-called preferential trade agreements with the world's major markets (especially the US and China) and the previously mentioned completion of the pending agreement with the EU.

Lecturas recomendadas:

  • Alconada Mon, Hugo, "La Ciudad de las Ranas", Novela, Planeta, Bs.As, 2022.
  • Gerchunoff, Pablo, "Raúl Alfonsín. El planisferio invertido", Ensayo Edhasa, Buenos Aires 2022.
  • Ghemawat, Pankaj, "Redefining Global Strategy. Crossing Borders in a World Where Differences Still Matter", Harvard Business Review Press, Boston, Massachusetts, 2018.
  • Ghemawat, Pankaj, "The New Global Road Map. Enduring Strategies for Turbulent Times", Harvard Business Review Press, Boston, Massachusetts, 2018.
  • Harris, Bryan, "Lula define su política exterior: pleno revivir el Unasur y destrabar el Mercosur", El Cronista, November 25, 2022.
  • Jia, Quingguo, "Reconstructing China's Role in Regional Security", East Asian Forum, November 6, 2022,
  • Merke, Federico, "Lula en el nuevo mundo", in "Le Monde Diplomatique,", edition 281, Bs As, November 2022, pp. 8 and 9.
  • O'Neil, Shannon K, "The Globalization Myth. Why Regions Matter", Yale University Press, New Haven & London, 2022.
  • Peña, Félix, "Por qué los espacios regionales cobran cada vez más protagonismo a nivel global", Foreign Trade Supplement, newspaper La Nación, November 24 2022.
  • Peña, Félix, "¿Se ha abierto una nueva etapa en la construcción de la integración económica en la región latinoamericana?: interrogantes que plantean las realidades internacionales actuales", November 2022,
  • Peña, Félix. "La vigencia del "método Monnet" para la integración regional", in the journal "Criterio", Buenos Aires, November 2022.
  • Stefanoni, Pablo, "Lula, alegría y preocupación, Desafíos para su tercer mandato", in "Le Monde Diplomatique",, edition 281, BsAs, November 2022, pp. 4 and 5.
  • Tadros, José Roberto, "O Grande Amazonas en Marcha", Paco Editorial, Anhangabú -Jundiaí SP, 2017

Félix Peña es Director del Instituto de Comercio Internacional de la Fundación ICBC; Director de la Maestría en Relaciones Comerciales Internacionales de la Universidad Nacional de Tres de Febrero (UNTREF); Miembro del Comité Ejecutivo del Consejo Argentino para las Relaciones Internacionales (CARI). Miembro del Brains Trust del Evian Group. Ampliar trayectoria. |

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