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A central idea that has been presented throughout the twenty years of
the publication of our Newsletter has been that the new international
realities, both at the global level and in each of the different regions,
have generated the need to adapt the working methods and institutions
used for the joint work of the countries that share a region, with a particular
focus on the countries of South America.
In order to better understand the debate on the methods of joint work
between Mercosur member countries, as well as the future development of
the regional integration process, it is advisable to look back at its
founding stages.
Mercosur's founding strategic idea was to form a customs union and then
a common market, in order to open up to the world and to negotiate jointly,
especially with the US and the EU, and within the framework of LAIA and
the WTO, as well as with other countries. This explains the definition
included in the Treaty of Asunción of a common external tariff
"to encourage external competitiveness".
The founding idea was clear: to deepen integration in order to build
a credible regional environment favorable to valued internal processes-politically,
democracy; economically, productive transformation; socially, equality-and
to the requirements of competitive insertion in the world, as well as
to attract investments, which would allow the partners to be an active
part of the internationalization of global production. Mercosur then appeared
as the backbone of the idea of a solid strategic alliance-open to the
world-between two contiguous major South American economies, to which
Paraguay and Uruguay were later added.
Creating a common platform to compete and negotiate in the world was,
and still is, one of the key purposes 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 would facilitate, through economic integration, the political stability
and economic and social development of the entire South American region,
with a clear Latin American scope.
It is therefore advisable to examine the roots of an integration process
such as Mercosur, since many of the positions adopted today by the main
protagonists seem to be the result of a tendency to underestimate the
historical background that explains the commitments made, or to confuse
the sequence of events and their connection with a systemic perspective.
Discontinuities in the previously defined paths, without necessarily responding
to new realities, could affect the international credibility of the Mercosur
countries, drastically reducing the effectiveness of the common project
in the fierce global competition to attract productive investment, and
affecting its quality as a valid interlocutor in complex international
trade negotiations. They also have a high economic cost, albeit imperceptible
in the short term, by discouraging productive investment in industrial
location decisions.
As we have pointed out on several occasions in our newsletter, it
is undeniable that, thirty years after its creation, Mercosur still needs
to be modernized and its objectives and working methods adapted to the
present and the future.
The problems it faces are largely the result of changes in global and
regional realities that have taken place since its inception. They are
also the result of current difficulties, which often affect the priorities
of its member countries. But they are also often the result of the working
methods used by the partners in their joint action and, in particular,
in the adoption of formal decisions that require consensus.
As we explained in our May 2023 Newsletter, at least three options
are considered feasible to address the current problems faced by Mercosur.
All three are possible, but their direct or indirect consequences could
be very different.
A first option would be to recognise the obsolescence of Mercosur,
and the country that deems it appropriate could achieve independence by
denouncing the Constitutive Treaty, as provided for in Chapter V. This
would be the equivalent of the "Brexit" option for the United
Kingdom. This experience may prove that the costs of 'disintegration'
for a given country may be even higher than those of 'integration', as
was the case for the UK.
A second option would be to undertake the process of amendment
of 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 the
approval of the respective parliaments. This could make this option inadvisable
in the realpolitik of a given country.
A third option would be for the four Member States to agree on
common policies and working methods aimed at making full use of the existing
constitutional rules, without having to resort to their amendment and
without prejudice to the possibility that it might even be desirable to
push for new constitutional rules at a later stage. This would seem to
be the more advisable option for any of the countries whose governments
might have doubts about the cost of securing the parliamentary support
that the second option would require.
We have pointed out that within the framework of this third option,
an attempt could be made to introduce substantial improvements in Mercosur's
objectives and functioning on at least three levels. These improvements
would not necessarily require formal reforms of the Treaty of Asunción
or the Ouro Preto Protocol.
A first level would be that of the methodology for the concertation
of national interests, which is necessary to achieve the adoption
by consensus of joint decisions by the Mercosur member countries, which
can then have an effective impact on reality.
Specifically, this proposal seeks to strengthen in practice the functions
of the so-called Administrative Secretariat, in particular with regard
to the process of technical preparation and adoption of joint decisions
requiring the consensus of all partners. Its aim would be to strengthen
its capacity to facilitate, through its contributions and initiatives,
the complex task of reconciling the interests and priorities of each partner
in the adoption of Council decisions requiring consensus.
This would not involve opening a debate on possible supranational
functions of the Mercosur Secretariat, which would mean that those
who perform them would consider themselves above the respective national
governments. It would mean granting the Secretariat the necessary technical
capacity to facilitate the complex task of reconciling the different positions
of the member countries, especially with regard to decisions that must
be taken by consensus. Helping to build such consensus would then be
a fundamental role of a strengthened Mercosur Secretariat.
This would also mean developing an active role for the Secretariat in
the creation of networks of academic institutions and technical discussion,
with the participation of experts from member countries as well as from
international organizations active in the region, including ECLAC and
INTAL.
In principle, the Mercosur Secretariat already has an organizational
modality that would allow it to fulfill such a function. Strengthening
its role in providing the experience, information and intelligence needed
to coordinate the diversity of interests and visions of its member countries,
and thus achieve the consensus necessary for the adoption of its decisions,
is something valuable that can contribute to enhancing Mercosur's role
in the productive development and international integration strategy of
its member countries.
Other aspects mentioned in our May Newsletter require special analysis
in order to be implemented. One of these is the sectoral agreements provided
for in Article 5(d) of the Treaty of Asunción and regulated by
Decision No. 3 of 1991. This must be addressed together with the instrument
of partial scope agreements, provided for in the Treaty of Montevideo
of 1980, which created LAIA, and linked to another relevant aspect of
Mercosur's integration strategy, which is the joint action with the countries
of the Pacific Alliance and other countries in the Latin American region.
A second level is the full inclusion in Mercosur's working agenda of
issues that have recently become more relevant, particularly those related
to climate change.
The above issues should be addressed in parallel with 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 so-called free trade agreements with the world's major markets (notably
the US, China, India, South Africa, Australia and Japan) and the conclusion
of the pending agreement with the EU.
As we recently pointed out in an article published in the Foreign Trade
Supplement of the newspaper "La Nación", forty-three
years after its creation, ALADI continues to be one of the most appropriate
frameworks for the development of the processes of gradual construction
of economic integration in Latin America. Since its creation in 1980,
it has been considered a key institution for the development of an idea
that is simultaneously relevant in the political, economic and social
spheres, both in the region and in each of its member countries.
Its founding instrument, the Montevideo Treaty of 1980, covers issues
relevant to the development of a common working strategy among the countries
of the region. And it includes, in a special chapter, partial scope
agreements that may be concluded with countries from other integration
areas outside Latin America (Articles 26 and 27).
The concept of Partial Scope Agreements is perhaps the main contribution
that the creation of LAIA has made to the regional economic integration
strategy of its member countries. In our view, it was the most important
outcome of the Acapulco meeting that led to the creation of LAIA. It is
perhaps the one that most contrasts with the pre-existing reality of the
previous phase of LAFTA, in which a central conceptual axis was that of
the "free trade area".
Chapter II of the Treaty defines agreements of partial scope as those
in which not all Member States participate. They create the conditions
for deepening a regional integration process through a progressively multilateral
scope. It adds that the rights and obligations established in them "shall
apply exclusively to the Member States which sign or accede to them".
After establishing the general rules applicable to them (Article 9),
reference is made to the different types of partial scope agreements according
to their purpose ("commercial", "economic complementarity",
"agricultural" and "trade promotion").
Finally, it is provided that rules for the conclusion of other agreements
of partial scope, including those on scientific and technological cooperation,
the promotion of tourism and the protection of the environment, may be
laid down by means of appropriate regulations.
Two chapters of the Treaty give it an even broader scope, in the perspective
of the current economic integration strategies of the LAIA member countries
and, in particular, to strengthen the idea of gradually building a process
of regional scope and global projection.
One of these (Chapter IV) refers to "convergence and cooperation
with other Latin American countries and economic integration areas".
The other (Chapter V) refers to "economic cooperation with other
areas of economic integration outside Latin America".
These are two areas that are increasingly relevant to the current international
integration strategies of the Latin American countries that are members
of LAIA. This is particularly the case with regard to the development
of their international integration strategies towards the Asian and African
regions.
It should be added that Article 38 of the Treaty sets out in broad terms
the functions that the member countries assign to the LAIA General Secretariat,
currently headed by Sergio Abreu, who has had a long and distinguished
career in his country, Uruguay, including the post of Foreign Affairs
Minister. These functions are relevant to the appreciation of the growing
role that the General Secretariat will have to play in the context of
the current and, above all, future global international reality.
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