| SUGGESTIONS FOR A NEW STAGE OF MERCOSUR AND
ITS IMPACT ON THE DEVELOPMENT OF SOUTH AMERICAN COOPERATION
In order to better understand the debate on the methods
of joint work among Mercosur member countries, as well as on the future
development of the regional integration process, it is advisable to go
back to its foundational stages. It is in its origins where we will find
explanations of the course taken by the international trade negotiations
in which our country participates, both at the regional and global level,
and particularly in the negotiations with the European Union.
The founding strategic idea was clear: to deepen integration
in order to create a regional environment that would be both credible
and favorable for valuable internal processes -politically, democracy;
economically, productive transformation; socially, equity-, as well as
for the requirements for competitive insertion in the world and the ability
to attract investments that would allow the partners to be an active part
of the internationalization of global production.
It is advisable to go back to the roots of an integration
process, since in many of the positions adopted today by significant protagonists,
there seems to be a tendency to underestimate the background that explains
the commitments undertaken, or to confuse the sequence of events and the
steps that were taken.
At least three options are seen as feasible to face
the problems that Mercosur confronts today. All three are viable, but
their direct or indirect consequences could be very different for the
construction of Mercosur and South American cooperation.
What we will discuss in this newsletter is based on our chapter from
the book by Gerardo Caetano and Diego Hernández Nilson (coordinators),
included below as Recommended Reading. It is a book containing articles
by different experts presented at the symposium "Mercosur 30 years:
trajectories, flexibilization and interregionalism", held virtually
in Montevideo on September 7, 8 and 9 of 2021. The symposium was organized
by the University of the Republic of Uruguay (Udelar), the German Institute
for Global and Regional Studies of Hamburg (GIGA), the Carolina Foundation
of Spain and the EU-LAC Foundation, based in Hamburg.
This is a chapter where we revisit ideas included in several previously
published works, some of which are reviewed in this opportunity.
A fundamental idea is that the new international realities, both at the
global level and in each of the different regions, are generating the
need to adapt working methods and institutions involved in the joint work
of countries, especially in the cooperation between countries that share
the same region.
In order to better understand the debate on the methods of joint work
among Mercosur member countries, as well as on the future development
of the regional integration process, it is advisable to go back to its
founding moments. It is in its roots where we will find some explanations
of the course followed by the international trade negotiations in which
our country participates, both at the regional and global level and in
the negotiations with the European Union.
The founding strategic idea was to form a customs union and then a common
market in order to open up to the world and negotiate jointly, especially
with the USA and the EU, and within the framework of LAIA, as well as
with other countries. This explains the definition of a common external
tariff "to encourage external competitiveness" included in the
Treaty of Asunción. It is an approach that has been present, since
its origins, in the idea of transforming the bilateral integration process
initiated in the 1980s by Argentina and Brazil, and later including Chile,
Uruguay and Paraguay.
The founding idea was clear: to deepen integration in order to create
a credible regional environment favorable to valuable internal processes
-politically, democracy; economically, productive transformation; socially,
equity-, and to 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 global production.
Mercosur, then, appears as the backbone of the idea of a solid strategic
alliance -open to the world- between the two main South American economies,
later joined by Paraguay and Uruguay. Creating a common platform to compete
and negotiate in the world was, and continues to be, the raison d'être
of the project launched in June 1990, in Buenos Aires, and 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, through economic integration, would facilitate
the political stabilization and economic and social development of the
entire South American space.
Two ideas were linked from the beginning. One was the creation of an
integration space in the South of the Americas, open to South American
countries and inserted in the context of the LAIA. The other was the joint
participation in broader hemispheric free trade negotiations, an initiative
launched in the early 1990s by President Bush of the United States. This
link became even more evident at the Ministerial Meeting held in Brasilia
on July 30 and August 1 of 1990, with the participation of Brazil and
Argentina, together with Uruguay and Chile, and where the basic guidelines
of the strategy to be followed were agreed upon. At the regional level,
these involved creating a customs union as a preliminary step to a common
market; at the hemispheric level, to negotiate together the still uncertain
development of the American proposal. Paraguay, which had just started
its path towards democratic institutionalization, later joined the group.
Chile, on the other hand, gave the reasons why it could not participate,
a position that was understood by the other countries.
Such elements are part of the political definition of the original strategic
idea, at least in its economic and commercial component. They have been-and
continue to be-inseparable parts of the founding negotiating package.
They involve, firstly, unrestricted access to the respective markets for
all goods and, in a further instance explicitly contemplated in the Treaty,
for services and other productive factors; secondly, a common external
tariff functional to the opening of the respective markets to world trade;
and thirdly, joint negotiations, including those with other LAIA partners,
with the US and the EU among others. All three elements recognize a central
and explicit assumption in the original approach: macroeconomic coordination
among the partners. Hence, it can be argued that, in the founding strategic
approach, Mercosur and hemispheric integration-together with free trade,
at least with Europe-were conceived as two sides of the same coin.
At the same time, it is clear from the founding moment that Mercosur's
associative pact was based on the idea that all members would be guaranteed
access to a market of more than two hundred million consumers, not only
for goods but also for services. This objective implied the development
of collective macroeconomic, sectoral and external trade disciplines.
We believe that going back to the roots of an integration process is
advisable, since in many of the positions adopted today by significant
protagonists there seems to be a tendency to underestimate the historical
background that explains the commitments undertaken, or to confuse the
sequence of events and their interrelation.
Discontinuities in the previously defined paths, which do not necessarily
respond to the new realities, could affect the international credibility
of Mercosur countries, drastically reducing the effectiveness of the common
project in the tough global competition for attracting productive investments
and affecting its quality as a valid counterpart to face complex international
trade negotiations. In particular, they have a high economic cost-although
not evident in the short term-in terms of discouraging productive investments
and industrial location decisions.
More than thirty years later, it seems indisputable that Mercosur is
in need of modernization and adaptation of its objectives and working
methods to current and future times. In fact, it is going through a delicate
moment in which its credibility is being affected and even its subsistence
is often being questioned.
The problems it faces are largely the result of changes in the global
and regional realities that have taken place since its creation. They
are also the result of difficulties that tend to affect the priorities
of its member countries. However, they can also be the result of the working
methods used for the joint action of the members and, in particular, for
the adoption of formal decisions that require consensus.
Three options are seen as possible to address the problems that Mercosur
is facing today. All three are feasible, but their direct or indirect
consequences might vary significantly.
A first option would be to recognize the possible obsolescence of Mercosur
and the country that considers it appropriate could gain independence
through the denunciation of the Constitutive Treaty, as foreseen in its
Chapter V. It would be the equivalent of what the "Brexit" option
meant for Great Britain. For any given country, this experience might
demonstrate that the costs of "disintegration" could be even
higher than those of "integration".
A second option would be to undertake the process of modifying the fundamental
ground rules and, more specifically, those of the Treaty of Asunción,
in particular Articles 1, 2 and 5, among others. This is an option with
uncertain deadlines and results which could have high and different political
costs in each country, as it would require parliamentary approval. This
fact would make this option unadvisable for the actual politics of any
Lastly, a third option would be for the four member countries to agree
on joint policies and working methods aimed at taking full advantage of
the existing constituent rules, without the need to resort to their modification
and without excluding the possibility of promoting new constituent rules
at a later date. This would seem to be a more advisable option for any
of the countries whose governments might have doubts about the costs of
securing parliamentary support for the second option.
Within the framework of this third option, an attempt could be made at
three different levels, among others, to introduce substantial improvements
in the objectives and functioning of Mercosur. These improvements would
not necessarily require reforms to the Treaty of Asunción or the
Ouro Preto Protocol.
The first level would be that of the coordination of national interests
necessary to achieve the adoption by consensus of joint decisions of the
Mercosur members, which would then effectively impact on reality and could
be carried out successfully. Specifically, what is proposed would be to
undertake an initiative aimed at strengthening the functions of 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 members. 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 imply opening a debate on possible supranational functions
of the Mercosur Secretariat, i.e. that those performing these functions
would be considered to be above individual national States. However, it
would require granting the Secretariat the necessary technical capacity
to facilitate the complex task of coordinating the various positions of
the member countries, particularly with respect to 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 the creation
of networks of academic institutions and technical analysis, with the
participation of experts from member countries, as well as from international
organizations operating in the region, including the ECLAC and INTAL.
In principle, the Mercosur Secretariat already has an organizational
model 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 members, and
thus achieve the necessary consensus for the adoption of decisions, may
contribute to enhance Mercosur's role in the productive development and
international insertion strategy of the member countries.
In this opportunity we will only mention the other two levels for improvement
briefly. One is that of the sectoral agreements provided for in Article
5, paragraph d) of the Treaty of Asunción and regulated in Decision
No. 3, of 1991. This must be approached in conjunction with the instrument
of partial scope agreements, provided for in the 1980 Treaty of Montevideo
that created the LAIA and linking them with another relevant element of
Mercosur's integration strategy, which is that of joint action with the
countries of the Pacific Alliance and with other countries of Latina America.
The third level for action refers to the full inclusion in the Mercosur
work agenda of issues that have acquired greater relevance in recent times
and, more specifically, those related to climate change.
The above mentioned issues should be addressed simultaneously through
an ambitious strategy of trade negotiations with a wide range of developed
and developing countries. Such a strategy should include, from the outset,
the negotiation of the so-called free trade agreements with the world's
major markets (especially the US and China) and the completion of the
pending agreement with the EU.
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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