THE AGREEMENT WITH THE EU AND ITS RE-FOUNDING EFFECT ON MERCOSUR
The necessary preparation for the day after its entry into force
by Félix Peña
English translation: Isabel Romero Carranza
The bi-regional agreement between Mercosur and the
EU conceived as a negotiating unit is entering its final phase
Due to its scale and its potential impact on the economies
and foreign trade of both regions, it will require priority attention
in the coming months, above all because it is an agreement whose negotiating
phase, at least in its commercial component, concluded a year ago and
is now ready for signing and subsequent parliamentary ratification.
If it is carried out as planned, it will provide an
opportunity to highlight the ability of Mercosur countries to translate
into concrete action the ambitious goals set in their strategies for international
commercial insertion and to demonstrate, to this end, that they are able
to meet such goals using effective organization methods.
At the moment of its formal conclusion and its entry
into force, the main stage of this bi-regional agreement will begin. This
stage could be called the day after". During this period, it
will be necessary for governments and businesses to do what is required
in order to fulfill the commitments agreed in the established time frame
and to take advantage of the assured expansion of the markets. Therefore
it is a stage that must be prepared in advance.
In practice, the preparation of the day after"
stage will begin when the final text of the full agreement is actually
disclosed, including its main pillars in the political, cooperation and
commercial aspects and the organizational and temporary provisions.
The publication of the bi-regional agreement that
is signed will be a key step towards the conclusion of the negotiations,
since it will facilitate the development of the necessary social debate,
including those that should take place during the corresponding legislative
After almost thirty years since the idea of ??the
bi-regional agreement began to be explored and twenty years of negotiations,
it would be difficult for political leaders to explain to their citizens
the economic and political consequences of a possible failure. On the
contrary, it would be more convenient for them to take advantage of the
re-founding effect on Mercosur itself.
Setting ambitious goals appears as one of the priorities for the future
development of Argentine and Mercosur foreign trade after the pandemic.
It could be a way of overcoming the brooding effects observed in the citizens
of our countries and in Argentina in particular as a consequence of the
In order to be perceived as realistic, this must be attained through
the development of the right institutional organization. Thus, in the
case of Argentina, it must effectively and simultaneously involve the
national government, the provincial and local governments, and all sectors
of society, including business, labor, and the new generations, as these
are the most sensitive to the development of reasonable and sustainable
conditions for the future.
They have to be ambitious goals, both in a quantitative and qualitative
perspective. That means that they involve significant and sustainable
leaps in the quantity and quality of the goods and services that are offered
to the world and that also showcase the know-how and technology used in
their production processes.
At the same time, a proper organization would contribute to such goals
being perceived as realistic, in the sense that they may lead to improved
efficiency and effectiveness in the management of all levels involved
in the implementation of an insertion strategy of Argentina and Mercosur
in world trade.
The agreement between Mercosur and the European Union, which is now entering
its final phase, provides an opportunity to highlight the ability of our
country and its Mercosur partners to translate into concrete action the
ambitious goals that are set in their strategies for international commercial
insertion, as well as to demonstrate, to this end, that they are in a
position to carry them out using the necessary organizational methodologies
at every level involved.
On the other hand, the realization of this ambitious bi-regional agreement
is linked to the need of Argentina and Mercosur to promote different types
of cooperation agreements with other relevant countries of the international
trading system, such as those in the agenda currently pending development.
All of them are supposedly agreements that are not only compatible with
the principles and rules of the multilateral system of international trade,
but would also mean a contribution to its strengthening, both from an
economic and political perspective.
The bi-regional agreement between Mercosur and the EU conceived
as a negotiating unit, as was the founding idea will therefore require
priority attention in the upcoming months. This is so not only because
of its scope and its potential impact on the economies and foreign trade
of both regions, but also because it is an agreement whose negotiation
phase, at least the commercial component, was concluded a year ago and
is already entering the stage of its signing and subsequent parliamentary
From the Argentine perspective, as well as from that of the Mercosur
and EU partners, after almost thirty years since the idea of ??a bi-regional
agreement started to be explored and twenty years of negotiations that
spanned different governments, it would be hard for political leaders
to explain to their citizens the economic and political consequences of
an eventual failure. Even more so if such consequences could have an impact
on the survival of Mercosur itself. On the contrary, it would be more
convenient for them to take advantage of their re-foundational effects
on Mercosur itself.
As of its formal conclusion and its subsequent entry into force, the
main stage of this bi-regional association will begin. This could be dubbed
the day after stage (on this topic, see the September 2019
edition of this newsletter).
In this stage, governments and businesses need to do what is required
to comply with the agreed commitments and established deadlines and also
do what is necessary to take full advantage, in an effective and therefore
measurable way, of the assured expansion of the markets.
In practice, the preparation of the "day after" begins when
the final text of the entire agreement is made known, including its main
pillars in the political, cooperation and commercial aspects and all its
organizational and temporary provisions.
The publication of the full text, which has not been made until this
date, will then be viewed as a fundamental step towards the conclusion
of the negotiating process. Among other things, it will facilitate the
development of the necessary social debates on the agreement, including
those that should take place during the corresponding legislative approval
To a great extent, the success that each country and its companies achieve
in their strategies to take advantage of the agreement, will depend on
what they do, from now on, in relation with the opportunities and challenges
that open up once it enters into force.
In preparing for the "day after", particularly from an Argentine
perspective, three issues deserve special attention:
- the first is the special attention that should be paid to the development,
in practice, of the provisions included in the bi-regional agreement
for the support of the participation and internationalization of small
and medium-sized enterprises;
- the second refers to the active participation of the different local
governments in harnessing, together with the productive sectors, the
opportunities that will arise from the bi-regional agreement;
- and the third is to analyze the multiple ramifications that the bi-regional
agreement may give rise to, as soon as it is inserted, with its rules
of origin, within the network of preferential trade agreements that
Mercosur and the EU have with other countries and regions, especially
with those of the Pacific Alliance.
Due to their relevance, at least in the Argentine case, we will continue
to analyze these three issues in our next newsletter.
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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