| THE POLITICAL WILL TO BREAK AWAY FROM INERTIA:
A necessary condition to restore the construction dynamic of Mercosur?
by Félix Peña
English translation: Isabel Romero Carranza
Three recommendations would seem appropriate in order
to break away from the inertia in which the process of construction of
the Mercosur seems to have fallen into, thereby restoring a reasonable
dynamic and the trust, even the enthusiasm, of the citizenships with the
The first recommendation would be to fully utilize
the existing diversity of the different legal frameworks based on agreements
that help build a space such as Mercosur while integrating it with the
rest of the Latin American region. These agreements provide the legal
foundation for one of the key elements of this construction, a space of
economic preferences aimed at facilitating the productive articulation
between the participating countries. Such distinct legal frameworks are:
the Treaty of Asuncion, which created the Mercosur; the bilateral Treaty
of 1988, which formalized the integration, cooperation and development
program between Argentina and Brazil; and the 1980 Treaty of Montevideo,
which created the LAIA.
The second recommendation would be to accentuate political
leadership, improving management capacity and ensuring effective compliance
with the agreed ground rules.
And the third recommendation has to do with the promotion
of productive articulation, especially through business networks that
span several countries and are facilitated by sectoral agreements. This
is the backbone of the architecture of a process such as Mercosur.
Rescuing the figure of the sectoral agreement can
be an effective way to restore the dynamic of the construction of Mercosur
and, simultaneously, to carry out the strategy of convergence in diversity
with the Pacific Alliance countries. These agreements are compatible with
trade preferences of variable geometry and multiple speeds. This would
also involve addressing other issues that are relevant for the development
of regional value chains projected to the world, such as those involving
trade facilitation, regulatory frameworks, intellectual property, government
procurement, and services, among others.
It would be difficult to deny that Mercosur is experiencing a deep crisis.
Differences of opinion between the governments of the member countries,
regarding who should assume the Pro-Tempore Presidency of the Mercosur
bodies during the second half of 2016, has accentuated the perception
that the integration process confronts serious difficulties in articulating
the different interests and points of view of its members. Such coordination
appears to be almost impossible at times, especially in the current political
and economic scenario.
The Presidency is not an organ of Mercosur and thus it is not included
in the organigram (http://www.mercosur.int/).
It is a function provided for in the Protocol of Ouro Preto for a collegiate
body, which is the Mercosur Council. This function extends to the other
collegiate bodies. It symbolizes the fact that for a six month period
and in rotation, one of the member countries takes charge of the function
of promoting the Mercosur. But this function has not altered the way in
which the decisions related to the integration process are adopted. The
country that holds the temporary presidency has no formal power to make
binding decisions. In practice, the exercise of this function has not
altered the tendency towards inertia and the loss of dynamism that has
been observed over the past several years.
An advisory opinion -a figure also provided for in the Protocol of Ouro
Preto-would perhaps help clarify the issue and thus channel the current
debate on the subject through a more precise path.
In a way, what is happening reflects a governance deficit of the integration
process, which dates back to a previous time, much before the current
differences were made evident. The main problem is not so much that there
are differences, even deep ones, in the visions of the integration process
and on how to develop it. Of greater concern is the relative paralysis
in the dynamic of Mercosur, which is supposed to be the result of a continuous
process of construction of a common preferential space, as a way to facilitate
joint productive transformation of the partners and consolidate democracy
and economic and social development. Such paralysis makes the differences
over the so-called Pro-Tempore Presidency even more relevant than what
they should be.
Given the situation, it would seem relevant to try to answer the following
questions: How to overcome the relative inertia that the construction
of Mercosur is experiencing now? How to imprint it with a dynamic that
befits the challenges faced by its member countries, both internally,
within their own region and also globally? How to restore a certain trust
among citizenships in the relevance and the future of the regional integration
These are some of the questions that seem to require a frank discussion
between the leaders of the member countries and, in particular, between
the political leadership. Indeed, they are not very different from the
questions being faced by the rulers and political leaders in the European
Union, especially since it has become clear that the "Brexit"
is not necessarily an isolated and transient episode ( see the July
2016 issue of this Newsletter on www.felixpena.com.ar).
This is a debate that would need to take place in each of the member
countries, in view of what are the real alternatives to the current Mercosur.
If the hypothesis were that a country has other viable options with similar
political, economic and social qualities -for example, in terms of creating
conditions of peace and political stability in the region and, at the
same time, facilitating productive transformation, economic and social
development and competitive insertion in the world-a possible rational
alternative would be either to resign membership altogether or to endeavor
to agree with all the partners the end of the current experience of Mercosur.
We have mentioned it on other occasions: nothing and no one forces a country
to participate in a voluntary process of regional integration if it considers
it is not convenient for its own interests and that there are other options
available. Neither are all the partners obliged to go ahead with the project
(see our interview published by O Estado de Sao Paulo, in its issue of
August 14, 2016, on http://internacional.estadao.com.br/).
Notwithstanding others, three recommendations would seem appropriate
in order to actually break the inertia in which the process of construction
of the Mercosur finds itself today and reestablish a reasonable dynamic
and the trust, even the enthusiasm, of citizenships with the common project.
By stating it in these terms we are suggesting to set aside the idea
that integration can only be achieved through simple, straightforward
and almost automatic steps -as would be, for example, establishing a free
trade zone or customs union, or even an economic and monetary union-,
the notion of a "one shot integration", in which the essential
is defined in the founding moment and everything else happens almost automatically.
On the contrary, we are proposing the need to imagine a process of integration
between sovereign nations willing to remain so, as a sometimes erratic
sequence of winding steps aimed at objectives which, in their ideal form
-as stated by theory- may never be achieved. That is, in contrast to what
is suggested by the most dogmatic views, a construction process that has
to be continuous and without an end point -if by this we understand a
new autonomous unit of power in the international system such as, for
example, the "United States of Europe" or the "United States
of South America "-and that will recurrently face crisis, possibly
existential and not only methodological. (In this regard, see the book
by Luuk van Midderlaar, "The Passage to Europe", Yale University
The first recommendation relates to fully utilizing the diversity of the
different legal frameworks based on existing agreements, which enable
to build a space such as Mercosur and simultaneously integrate it with
the rest of Latin America and, at least, the South American region.
These agreements provide the legal foundations for one of the most essential
elements of the construction: an area of economic preferences with a strong
dose of exclusivity aimed at facilitating the productive articulation
between the participating countries. In order to be effective, these preferences
must be protected from a premature wearing out of their effects on the
decisions of productive investment, as would happen if they were not guaranteed
legally, or if they could easily be rendered irrelevant through successive
preferential agreements that any of the partners acting "on their
own" could sign with third countries.
Such distinct legal frameworks are: the Treaty of Asuncion, which created
the Mercosur; the bilateral Treaty, which formalized the integration,
cooperation and development program between Argentina and Brazil; and
the Treaty of Montevideo, which created the LAIA (ALADI).
Today, the commitments made by the Mercosur partner countries and other
Latin American countries are embedded in these different legal frameworks
and, sometimes, in all three simultaneously. The set of these distinct
legal frameworks is what enables to build an integration space between
the member countries of the current Mercosur with variable geometry and
multiple speeds. Nothing prevents, for example, to use the bilateral agreement
between Argentina and Brazil to promote, in the framework of LAIA -for
example, using the instrument of economic complementary agreements-, sectoral
agreements in which other LAIA countries participate and not necessarily
all who are members of Mercosur. The flexibility provided by the way in
which Mercosur has interpreted the instrument of the common external tariff
would facilitate such kind of approaches that, moreover, already have
precedents in the experience of Mercosur.
The second recommendation involves accentuating political leadership,
improving management capabilities and ensuring reasonable compliance with
the agreed ground rules.
Political leadership, exercised primarily by the head of a state, characterized
the founding moments of the agreements between Argentina and Brazil, thirty
years ago, and of Mercosur itself, twenty five years ago. There have always
been times of political leadership but they have not always preserved,
with intensity and at presidential level, the necessary continuity and
coordination with the management capacity.
Management capacity was manifested in the founding moments in the articulation
between presidential leadership and the so-called Common Market Group,
most notably through the crucial role of the respective coordinators.
Being able to identify at each moment and in each specific country, who
exercises such coordination and, therefore, is effectively in charge of
the management of Mercosur, is fundamental to the effectiveness needed.
This is not always possible, beyond the access to the names of those who
formally hold office. A good test in this regard consists of asking businessmen,
journalists or other actors -such as diplomats from other countries- who
they believe has responsibility for coordinating the effective management
of Mercosur in the corresponding country. It is also essential that such
management capacity could be strengthened by the role assigned to the
technical body, which is the Mercosur Secretariat. More than a so-called
supranational body, its function is to facilitate the process of coordination
of national interests. Except in exceptional moments, this function has
not been evident in the history of Mercosur.
When building a regional space, as when playing soccer, compliance with
the rules of the game is what provides a certain order in economic competition
and in the relations between nations of unequal size, ensuring the respect
for the interests of those who have less relative power.
As we have noted on other occasions, the quality of the rules and the
effectiveness of the mechanisms that create them, as well as of those
who can independently control their fulfillment, are, along with political
leadership, key elements to ensure that the construction of integration
respects the national interests of all the countries involved, both large
and small. And it is, in our opinion, a key factor if the objective is
to effectively overcome the current inertia that paralyzes the Mercosur.
And the third recommendation is related to the articulation of productive
activity, especially through business networks that span several countries
and that are facilitated precisely by sectoral agreements. This is probably
the backbone of the architecture of a process such as Mercosur. Its roots
are in the original proposals of Latin American integration of the late
fifties. It again became a backbone in the founding moments of the bilateral
agreements between Argentina and Brazil. It was likewise in the initial
concept of Mercosur. Later on, sectoral agreements were drawn into a relative
oblivion. Perhaps such forgetfulness is one of the factors that led to
the subsequent inertia.
Recovering the figure of the sectoral agreements can then be an effective
way to restore the dynamic of the construction of Mercosur and carry forward
the strategy of convergence in diversity with the Pacific Alliance countries.
For this purpose, and in addition to political leadership, it would also
be necessary to have companies with offensive interests and the ability
to link up with other companies.
Such agreements are compatible with trade preferences of variable geometry
and multiple speeds. In order to be effective, they require adequate good
quality physical connectivity. They also entail addressing other relevant
issues for the development of value chains of regional scope and projected
to the world, such as those relating to trade facilitation, regulatory
frameworks, intellectual property, government procurement, and services,
among others. This is an approach that allows developing the agreements
in relation to the different sectors and, eventually, to specific sub-sectors,
and among them, the industrials and agro-industrials stand out, as does,
increasingly, the services sectors.
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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