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  Félix Peña

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 Revista Apertura | Enero de 1994

Mercosur: more than a trade pact

Many people see Mercosur as a trade scheme by two giants to sew up the regional market. But shared development is the ultimate goal.

The original concept of the Southern Cone Common Market (Mercosur) goes a lot further than many people think. It is not merely a project to expand trade ties among its members. It is also, and more importantly, a joint proposal for the shared development of South American nations. The Mercosur pact's deepest significance is political. It is a strategic alliance destined to facilitate, in each of the 4 member countries (Argentina, Brazil, Paraguay and Uruguay), the consolidation of democracy, the transformation of the productive sectors of the economy, and the insertion of the region in the world marketplace on a competitive footing.

21 ST CENTURY VIEW. As such, the Mercosur agreement is projected into the 21st century. It is founded on the requisites of a world which is already demonstrating itself to be highly unstable and unpredictable, but a world in which so-called "mega-markets" will undoubtedly take a leading role in economic and technological competition.

These inter-governmental joint ventures will very likely be made up of partners who share ideas and basic values, both with regard to their development objectives and their place in the world, but who wish to maintain their respective national identities.

This is, after all, why they are together, since it should be remembered, Mercosur is a voluntary alliance among its sovereign members and it is backed by legitimate democracy. It is a good idea to bear this in mind whenever doubts are raised about the pact. To limit Mercosur to its trade facet would be to bastardize the original idea. If this were the objective, there would have been no reason to develop ties to the degree of integration described in the Asunci6n Treaty signed by the Mercosur member states.

The idea of regional integration has a lengthy history, but it only began to take on concrete characteristics when Argentina and Brazil began to seriously draft bilateral objectives, starting with a summit between Raul Alfonsín and Tancredo Neves, and developing to its current level as of the summit between Carlos Menem and Fernando Collor de Mello.

MULTIPLE INTEGRATION. Mercosur can best be described as a multidimensional process of regional integration. And it turns on political axis.

First of all, because it has a high dream content — the dream of a more desirable Future, a dream which is essential to any transformation that hopes to acquire a social consensus. Secondly, Mercosur signifies the projection of the region as an integrated market that is a better place to do business and compete in a world made up of large political and economic blocs.

But while this political aspect implies a shared — but not necessarily identical — view of the world around us and the challenges that it offers, this alone is not enough to forge lasting integration. Sustained integration and development also require shared — but not identical, either — focuses on how to develop a favorable economic climate for investment, efficiency and competition, so as to also generate employment and an environment for social equality. Integration as a means of doing business better and competing more was the principal idea behind the formation of Mercosur. Reciprocal exploitation of respective markets is surely of fundamental importance. Indeed, the basic idea is to create unrestricted access to member markets. This liberalization should serve as a means for companies to acquire the scale necessary — many times by integrating with other local firms or with businesses from the other 3 countries — in order to be able to incorporate sufficient technological progress to compete on a broad global level.

Nevertheless, given the relatively marginal influence of intra-Mercosur trade, compared with the ample diversification of Argentina and Brazil's insertion in the world economy, an introverted Mercosur — that is, a market centered on trade among its members — would make no historical sense and would thus not be politically viable. It would simply be an invitation to constant trade conflicts, aggravated further by the clear asymmetry among the economies of member states.

CULTURAL TIES. As originally envisioned, Mercosur is also a proposal created on a solid cultural basis. The idea of working together, after all, is founded on shared values and common visions of the relationships of our nations with the world and of the socio-economic development of each member country.
It is a shared dream, even as regards economic considerations, that has nurtured integration. And it is from this point of view that environmental concerns should be integrated into the Mercosur dialogue. It should be pointed out here that these concerns have been included in discussions of the integration agreement from the start. The whole idea of the pact was development, after all, and environmental protection is of growing importance in the domestic policies of market members and in the public opinion of their respective populations. This is why, at the First Presidential Summit on Mercosur (Brasilia 1991), the main topic of discussion was environment.

A GREEN MARKET. The environmental issue is on the agenda of Mercosur in a number of different ways. First, a proposal projected to the future and centered on man — as a citizen, tax payer, consumer, innovator, worker, etc.- cannot possibly overlook the functional relationship between economic development and preservation of the exceptional natural habitat in which we, as South Americans, live. The Mercosur common agenda is made up of critical priorities for the human and social development of member states. As such, it must necessarily include environmental action.

Second, environmental concerns are also a characteristic feature of the reality of international trade today and are translated to an ever greater degree into regulations and policies. This signifies that environmental protection priorities can be used to create a major distortion in relative competition factors, even among countries that share the same integrated space.

Sharing the same economic space particularly in the case of customs regulations, which are bound to be less than perfect in the early stages of integration implies the establishment of clear playing rules, the kind of clarity that would not permit the questionable utilization of environmental barriers to arbitrarily limit access to market areas agreed on by member nations. But these rules would also tend to harmonize national policies and legislation, including the setting of common standards for the preservation of the environment. Third, working together, as Mercosur member states will be permits countries to negotiate international game rules for trade and environment-linked issues from a position of greater strength than that obtained by a single nation, especially within the context of GATT. It will also permit government to better back the efforts of business to compete on OECD markets that are even more demanding with regard to environmental protection. A good example of the kind of joint environmental effort between business and government that may be developed within the context of Mercosur is the creation of so-called "Green Seals" of approval for environmentally safe products to be marketed in the European Community.

Consideration of these factors at the 2nd Presidential Summit on Mercosur (Las Leñas, July 1992) led to the scheduling of special meetings on environment, the first session of which took place in Montevideo last November.

This meeting, within the institutional framework of Mercosur, brought together the national officials in charge of environmental administration and protection from each of the 4 countries.

The purpose of these contacts has been to detect imbalances and differences in policies and regulations that can artificially affect relative levels of competitiveness. Once this is done, it is a matter of seeking com¬mon grounds on which to harmonize interests and project solutions within the context of the common market and world levels of competition on which to base a new scale of environ¬mental values for economic integration.

PURELY ENVIRONMENTAL. But Mercosur ecological concerns are not limited to the trade/environment relationship. Multi-dimensional pact that it is, Mercosur tends to demonstrate other common and conflicting interests as well — interests that could well open the door to the regional development of infrastructure, for instance. Here is should be remembered that environment is central to projects of strategic importance to the Southern Cone of South America: The Paraguay-Parana Waterway Project is just one example. In that project, technical studies being carried out with IDB financing, place top priority on environmental considerations, particularly in the Mato Grosso swamp region. Mercosur is, nevertheless, a long-term project. By the start of 1995, it will only just have concluded its transitional stage, with unrestricted access to all four markets having, by then, theoretically been established on a stable basis. At this point a definitive process will be initiated. It will take a number of years, from that time on, to fully achieve the pact's objectives, including the perfecting of a customs and common market union.

ONLY THE BEGINNING. The establishment of a formal common market will only be the beginning for the later development of Mercosur and for the definition of its fundamental instruments and mechanisms. Central to the initiation of this stage will be the development of common institutions and regulations that permit the playing field to be effectively leveled, since for a time — in fact, perhaps for a long time — it would be Utopian to think that a satisfactory level of macro-economic and sectorial policy harmonization can be reached. It will require many years to fully realize the great potential of the joint development of the southernmost region of the Americas, since the political and social problems that beg solutions and the challenges to be faced are enormous. Here it will be of capital importance to preserve a common sense of direction — the specific task of politicians and statesmen — and to operate with a flexible and pragmatic attitude.

It would be an error to place instrumental considerations over strategic ones at the first sign of circumstantial trouble.

On the environmental front too, Mercosur finds itself at the outset of a long road.
For now, the meetings of specialized teams from all 4 countries will serve as an adequate framework to discuss the demands of each nation's specific reality, and if these discussions are properly channeled to the Mercosur Council and Presidential Summits, they will give birth to viable projects for the future. For this to happen, it is vital that specialized environmental non-government organizations also achieve a high level of regional integration.

They must also coordinate their action with that of NGOs from other sectors — such as consumer defense groups, for instance — which share goals that link the basic commercial and political objectives of the Mercosur accord with the rights and interests of the individual citizens of the 4 signatory nations.

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 trayectoria. |

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