THE ADAPTATION OF MERCOSUR TO DYNAMIC REALITIES:
A new approach to the recurrent and complex debate on undertaken commitments. |
by Félix Peña
May 2015
English translation: Isabel Romero Carranza
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In the case of Mercosur there have been growing trends
in recent times demanding changes in the strategies and working methods
of a process whose design originated in its founding moment, when the
global, regional and national contexts were markedly different from the
current ones. In some cases -however few- explicit doubts have been raised
regarding the convenience of the existence of Mercosur as a common project
involving its member countries.
Today, the main debate is focused on the possibility that member countries
undertake bilateral trade negotiations with other countries. Different
official sources of high political level in Mercosur countries have raised
the idea of reviewing the methodologies of international trade negotiations.
It has often been noted that the obstacle that would need to be removed
to enable member countries to carry out bilateral trade negotiations,
or at the very least "multi speed" ones, is Decision CMC 32/00.
This is not necessarily so since changing or abolishing this regulation
would not suffice.
As a contribution to the debate that has originated, it may be pointed
out that the protection of the preferential treatment that the partners
have granted to each other results not so much from Decision CMC 32/0,
but from the combination of the provisions of Article 5 of the Treaty
regarding unrestricted access to the respective markets, established to
in subsection a, and the instrument of the common external tariff, provided
in subsection c. However, the Treaty does not prevent the common external
tariff from being interpreted with the scope and flexibilities of Article
XXIV of GATT.
By establishing reciprocal rights and obligations between the member
countries, the Treaty creates the main legal -and thus political- guarantee
of the commitments freely made by the member countries, conceived as an
indivisible whole. Dissociating them would require changing the Treaty
with a new multilateral international legal instrument negotiated between
Mercosur member countries. This would not be an easy task.
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The convenience of adapting Mercosur to the new realities of the global
and regional context in which its member countries are inserted seems
hard to ignore. It can also be considered as a common occurrence that,
from time to time, can be seen in the development of integration processes
between sovereign nations that share a regional space. This adaptation
has been relatively frequent in Europe and is nowadays one of the most
important issues on the agenda of the EU. It is accentuated in times of
profound global and regional changes such as these, with notorious political,
economic and social impacts on the member countries of the corresponding
integration process.
In the case of Mercosur, there is a growing trend towards a demand for
changes in the strategies and working methods, which originated mostly
at the time of its foundation in 1991. This means that they originated
in a global, regional and national context markedly different from the
current one. In some cases -however few- there have been explicit doubts
regarding the convenience of the existence of Mercosur as a common project
of its member countries. These concerns are more existential than methodological.
Somehow, they are similar to what can be observed in the European case
in the questionings of the sectors called "Eurosckeptics".
However, the main debate today focuses on the possibility of member
countries to develop bilateral trade relations with other countries. As
we already noted on another occasion, when we considered it appropriate
to address the issue (see the November
2014 edition of this newsletter on http://www.felixpena.com.ar/),
this is not a new debate, much less the only issue to be included in an
agenda for the adaptation of Mercosur to the new realities. Other issues
also deserve priority attention, such as the institutional quality of
the integration process; the transnational production chains, especially
in some sectors where the countries of South America have competitive
advantages when inserted in the global economy; or the convergence in
diversity of the various integration and cooperation agreements between
Latin American countries.
It is a debate that in the recent past has had significant expressions
at the business academic and government level. At some point in the year
2001, it was reflected by the proposals of the Argentine government to
negotiate bilaterally a free trade agreement with the US. Further on,
it was propounded by the governments of Uruguay -first by that of Jorge
Batlle and later by that of Tabaré Vázquez- also with the
idea of concluding a bilateral agreement with the US. It should be remembered,
in light of the current debate, that in both cases there were strong reactions
from the Brazilian government in the sense that this would have implied,
in practice, the end of Mercosur (see for example, in the case of the
negotiations attempted by Uruguay, the compelling book by Roberto Porzecanski:
"No voy en tren. Uruguay y las perspectivas de un TLC con Estados
Unidos (2000-2010)" published in 2010 by Editorial Sudamericana Uruguay,
Montevideo, especially pages 184-185 and 210-211).
More recently, the business and academic sectors of some member countries
-particularly from Brazil and Uruguay- are supporting the idea that Mercosur
countries should be allowed to negotiate bilateral free trade agreements,
especially with the EU, or at least, using the so-called "umbrella"
formula, be able to negotiate bi-regional trade agreements of multiple
speeds for the commitments made by each one of them, especially in terms
of tariff reductions. In some of the statements made in this regard, the
position of Argentina has been blamed for the inability to realize an
exchange of offers in the negotiations with the EU. As there have been
contradictory statements on this issue, the impression is that they could
be part of the two most common games in international trade negotiations:
the "bluffing game" (to pretend that negotiations are effectively
in progress) and the "blame game" (to blame any of the protagonists
for the eventual failure of a negotiation). These two games can even become
complementary, as seems to be the case when analyzing the FTAA negotiations,
in order to understand their failure and also, incidentally, in the bi-regional
negotiations between Mercosur and the EU.
In recent times, different official sources of high political level in
Mercosur member countries have highlighted the need to review the methodologies
of international trade negotiations. As an example, on May 12, there was
a consultation meeting between Chancellor Rodolfo Nin Novoa and the representatives
from the political parties on the topic of Uruguay's foreign policy. According
to the published report: (see http://www.mrree.gub.uy/
), "In relation to Mercosur, it expressed the commitment to the
process of regional integration, the need to acknowledge its progress
in some areas and also to face the challenges that it presents in order
to boost the international insertion of the region in an international
context where the multilateral trade negotiations within the World Trade
Organization are finding difficulties and countries are opting for interregional
trade agreements. Moreover, the importance of making the process of integration
more ´sincere´ was stressed, while seeking to contemplate
the situation of every country. This involves two objectives, first perfecting
the free trade zone and, secondly, advancing the agenda of external relations
to allow agreements with other regions, such as the negotiations between
Mercosur and the European Union as well as with other countries, contemplating
the modality of different speeds". In his speech at the International
Affairs Committee of the Chamber of Deputies(see http://www.mrree.gub.uy/
), Novoa noted that: "In terms of integration, I would like to
state again that Mercosur is our starting point. We are in the region,
we belong in the region and we will not be the gravediggers of Mercosur,
but we understand that there must be sincerity in its functioning".
He added that "we also believe it is necessary for the functioning
of Mercosur to explore the possibility of flexibility in the mechanisms
of trade negotiations of the bloc, through a system of different paces
and speeds that will allow member states to move bilaterally in the measure
of their possibilities. We said this in our inaugural speech. We want
to see if there is a possibility of relaxing Resolution No. 32/00 which,
in reality, has not been internalized by any of the legal systems of the
member countries of Mercosur, but since it obviously constitutes a political
commitment its violation could bring worse consequences than desired.
So we will look for ways of making the possibility of bilateral agreements
more flexible" (translation is ours).
Also very recently, there have been statements by senior government officials
of Brazil (e.g.: the Secretary of Strategic Affairs and the Minister de
Development, Industry and Foreign Trade) with similar and even more forceful
arguments (see, in the case of Minister Mangabeira Unger, the articles
by Eliane Oliveira, published in O Globo on May 9, 2015, at http://oglobo.glbo.com/economia/
and on May 12, 5015 at http://oglobo.globo.com/,
and in the case of Minister Armando Monteiro, the article by Lorenna Rodriguez,
published in O Estado de Sao Paulo, on May 7, 2015 under the heading "Acordos
bilaterais viram prioridade do governo"). All these has been reflected
by many news stories in Mercosur member countries, with natural repercussions
in third countries, where it has been pointed out that a consensus could
have been reached already, even including the Argentine government, to
move forward with multi-speed negotiations.
As we mentioned in the November issue of this Newsletter and continuing
with the ideas expressed in it, it is often affirmed that the obstacle
that needs to be removed in order to allow members to address bilateral
trade negotiations or, at least, "multi-speed" negotiations,
is CMC Decision 32/00, which actually referred to trade negotiations mainly
within the scope of the LAIA (see the text on http://www.mercosur.int/).
In any case, changing or deleting that rule would not be enough. This
is clear from Article 1, which reaffirms "the commitment by States
Parties of Mercosur to jointly negotiate agreements of a commercial nature
with third countries or groups of countries from outside the area in which
tariff preferences are granted" (translation is ours)"
Where is then the origin of the commitment to jointly negotiate "tariff
preferences" with other countries or blocs? It is in the fact that
the provision for a "common external tariff" was established
at the founding moment. The Treaty of Asunción did not specifically
define its scope. It becomes relevant then, when attempting to define
the scope of such commitment, to refer to the only significant legal precedent
on the matter: Article XXIV of the GATT, which includes a flexible definition
that, paradoxically, was partly 'censored' by Professor Bela Balassa (refer
to his book Theory of Economic Integration, George Allen & Unwin Ltd,
London 1973, note 1 on page 21). For many experts, the definition of a
customs union, including the concept of external tariff, made by Bela
Balassa -among other relevant theorists- is almost like revealed truth.
Let us ask again the question we made in the Newsletter of last November:
what would explain the inclusion, in the Treaty of Asunción, of
the instrument of the common external tariff stipulated in Article 5?
The idea of 'anchoring' the tariffs of a country in a multinational commitment
seems to have had an influence. At least this was pointed out in reference
to those responsible for economic policy in the government of Brazil at
the time. But it is also possible to argue that the inclusion of the commitment
to establish a common external tariff in Article 5 of the Treaty had much
to do with the fact that the US had expressed its interest -through the
Initiative of the Americas launched by President Bush- to move towards
a free trade area from Alaska to Tierra del Fuego, which then led to the
negotiations of what would have been the FTAA.
This interpretation of the common external tariff considers it as some
kind of mutual guarantee among Mercosur members regarding the extension
to third countries -especially non-LAIA members- of the preferential treatment
agreed with the creation of Mercosur. It implies viewing Article 5 -which
contains the strongest legal obligations resulting from the Treaty of
Asunción- as establishing a direct link between unrestricted access
to the respective markets (subsection a) and the common external tariff
(subsection c) . The link is legally reinforced by a central clause in
Article 2 of the Treaty: "The Common Market will be based on reciprocity
of rights and obligations between the States Parties".
One conclusion of the advanced interpretation is that the formula of
bilateral preferential trade agreements between countries of Mercosur
and other countries, and even the so-called multiple speed reductions
agreed with one or more other countries, could be accepted as long as
this does not involve unilaterally liquefying the preferential treatment
that the partners have granted each other.
Such preferential treatment results from combining unrestricted access
for goods in the markets of the partners, with a common tariff on goods
from third countries. However, if the effect of liquefaction of the preferential
treatment were to result from the negotiations of one partner with third
countries, the affected partner could, in such case, suppress the preferential
access to its market of the corresponding goods.
As a contribution to the debate, we can restate the conclusion anticipated
in our Newsletter from last November, in the sense that the protection
of the preferential treatment that the partners have granted each other
on the basis of reciprocity, results not so much from CMC Decision 32/00
as from the combination, established in Article 5 of the Treaty, of unrestricted
access to the respective markets, specified in subsection a, and the instrument
of the common external tariff, provided in subsection c. We should keep
in mind, however, that the Treaty does not prevent the common external
tariff from being interpreted, for example, with the scope and flexibilities
of Article XXIV of the GATT.
By stating in its Article 2 the reciprocity of rights and obligations
among member countries as the basis of the Common Market, established
in its Article 1, the Treaty of Asunción introduces the main legal
-and thus political- guarantee of the commitments freely undertaken by
the member countries, conceived as an indivisible whole. Dissociating
them would require changing the Treaty, which would involve agreeing on
a new multilateral international legal instrument negotiated between Mercosur
member countries. Or, alternatively, it would require that the country
that eventually disagreed with the connection between unrestricted preferential
treatment and a common external tariff denounced the Treaty.
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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
information.
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