I. A phenomenon with diverse interpretations
The deep changes that are taking place at the international and regional
level and certain dissatisfaction regarding the progress achieved, especially
when considering the expectations, can account for the deepening of a
needed debate on Latin American integration and its future. (Casanueva,
2010, pages. 33-36; Leiva, 2010, pages 17-31; Peña, 2010, pages
425-450; Peña, 2010, pages 23-43; Priess, 2010, pages 175-187;
Sanahuja, 2010, pages 451-523; Sanahuja, 2010, pages 87-134; Simonit,
2010, pages 45-86).
This is a debate strongly conditioned by the interpretation that the
respective analysts and protagonists have made of the events of the last
fifty years and of what is currently happening. This is due to the fact
that Latin American regional integration -and the integration of its diverse
sub-regions- is a phenomenon that allows for different interpretations,
both in its political and in its trade and economic dimensions, which
can be quite conflicting. In any case, the complexity of these interpretations
may be explained by the proliferation of institutional ambits whose functions
and scope would seem to overlap.
For some observers, especially those foreign to the region, such is the
impression conveyed for example by the co-existence of UNASUR (Union of
South American Nations) and Mercosur (Southern Common Market) -and also
to a certain degree the Andean Community of Nations (CAN) - within the
South American regional space.
The picture appears even more complex and heterogeneous if we consider
the existing institutional ambits -or those that are being projected-
within the wider Latin American geographical space. Sometimes it becomes
difficult to specify their reach, scope, functions and real jurisdiction.
There are several cases that can be considered, each with different degrees
of formalization. In some cases their area of responsibility is focused
only on economic and trade issues. These are: the Latin American Integration
Association (ALADI), the Latin American Economic System (SELA), the Rio
Group, the Bolivarian Alliance for the Americas (ALBA) and, most recently,
the proposed Latin American and Caribbean Community.
Seen as a whole, such ambits may generate the idea of an unintelligible
mosaic, for example in the apparently more orderly perspective of the
European integration, at least seen in the light of its most recent stage
of the last two decades, before the current global financial crisis had
an impact on some of the member countries of the European Union. This
tendency towards disorganization produced by the regional reality is accentuated
if we consider confrontations such as the ones that have taken place in
recent years between the governments of Colombia and Venezuela, or the
data on warfare expenditures (Priess, 2010, pages 175-187).
Without overlooking others, there are at least two possible views on Latin
American integration that deserve our attention.
The first places the emphasis on what the development of the integration
between countries sharing a regional geographical space should be. This
outlook stresses considerations of a regulatory and even idealistic nature.
It is a point of view that can be found frequently in the analysis of
specialists and protagonists, both from within and from outside the region.
In such cases, reality is confronted against what it should be using different
reference points. Thus it tends to appear lackluster, even unsettling.
The perspective used is based on theoretical models either coming, for
example, from the theory of international relations or of international
trade. It is also usually based on the comparison, either implicit or
explicit, with other experiences from other groups of countries -most
frequently that of the countries which developed the European integration.
The other approach involves a view from the perspective of what were
defined as the formal objectives of the corresponding institutional ambit
of regional integration, either by the founding legal instruments or by
the interpretations that were made of them by the political protagonists
of the moment. These interpretations usually have a strong "diplomatic
media" content meaning that they involve the use of concepts and
the construction of a narrative aimed at producing an immediate positive
effect on the local public opinion of the respective countries. The adjective
"historical" is frequently used for this purpose.
It is common that such view leads to encounter a gap, sometimes a great
one, between what was understood or stated about what a certain integration
process would be -especially because of the concepts used in texts and
declarations- and what were the actual results.
In the case of Latin America, such outlook normally leads to a negative
assessment and even to the devaluation of the phenomenon of regional integration.
The trend towards the devaluation of agreements and integration processes
is in opposition with that of exaggerating the expectations of the eventual
results, used more frequently by the protagonists of the respective foundational
moments. As a matter of fact, both trends complement each other.
On the contrary, the other interpretation that can be highlighted, tends
to favor the analysis of the progress achieved, even if small, not in
relation with theoretical paradigms, previous experiences, foundational
regulatory schemes or the expectations generated by the protagonists of
the moment, but in terms of the concrete possibilities and of what would
have eventually been the prevailing situation between the respective countries
had the idea of integration not translated into commitments, facts and
lines of action. The capacity and potential of a given integration process
to generate, among the participating countries, a relative mutual trust,
common ground rules, social and business networks with cross interests
and common symbols are some of the main indicators to be taken into account
in such interpretation (Peña, 2010, page 440).
The mentioned progress, even when small, can then be measured by the
degree of neutralization of the deep forces that in the relations of neighboring
nations with a significant degree of connectivity and interdependence
normally lead to the predominance of the logic of conflict over that of
co-operation and integration. On this regard, history has shown that the
most common occurrence between nations that share the same regional geographical
space has been the prevalence of the logic of conflict, ultimately resulting
in armed confrontation, quarrels and war in its multiple and changing
In this second outlook, the concept of integration is directly linked
with that of the governance of a regional geographic space, measured by
indicators related with the prevalence of peace and political stability.
Seen in such perspective, it is interesting to observe the trends and
events that signal the consensual construction by the participating countries
of what they understand to be the most convenient regional environment,
particularly in terms of institutions and ground rules that facilitate
an atmosphere of reciprocal trust and a relation of mutual co-operation,
that also becomes manifest in the different sectors of the respective
societies. Such gradual construction, based on the perception that the
countries of the referred space have of their respective national interests,
is sometimes unnoticeable in the short term.
As will be seen later on, it is a construction that does not necessarily
correspond with preconceived models -neither theoretical nor of other
regional spaces-, nor does it have an endpoint that would imply the substitution
of preexisting national sovereignties for a new autonomous unit of power
in the international system, or even reach a point of no return that makes
the predominance of the logic of integration irreversible.
In our opinion, a realistic analysis of Latin American integration has
to have the characteristics of the second possible interpretation. For
this purpose, it has to take into account the experience accumulated in
the last fifty years, during which the countries of the region have strived
to move forward in the development and institutionalization of voluntary
processes under different forms and degrees of formality, but which have
as a common denominator precisely the strategic idea of working together
between countries of the region or of the different sub-regions that form
part of it.
Essentially, the strategic idea refers to the construction of a regional
geographical space in which the conditions for peace and political stability,
democracy and social cohesion, productive transformation and the competitive
insertion in world economy prevail. In this manner, integration is perceived
as the opposite of what historically has prevailed among nations sharing
a given regional geographic space, namely conflict which eventually leads
to different forms of violent confrontation.
More than an ideal the strategic concept reflects a concrete need to
favor, in the perspective of each country, a peaceful and cooperative
relation with the neighboring countries. Thereof the fact that such idea
acquires more significance and is translated into more tangible commitments
between the nations that perceive themselves as sharing a same regional
space. The issue of geographic vicinity is, in such sense, essential.
Sharing a same space means, in practice, recognizing the interdependence
-in different planes but in particular, in the political and economic-
that results form the degree of connectedness -not only physical- that
exists between nations. This interdependence and connectedness can result
precisely in cooperation or in conflict and can generate perceptions of
common or contradicting interests in the mutual relations and in the relations
with other nations.
Different elements are used in this construction. These are expressed
through several instruments aimed at establishing, in practice, a differentiation
between "us" and "them" based on a minimum degree
of mutual trust -that can grow in time- and that translates into trade
preferences compatible with the commitments entered into within the wider
scope of the GATT and, nowadays, with the rules of the World Trade Organization
Additionally, if a realistic analysis also aspires to be a positive one
and contribute to the governance of a given regional geographical space,
it should attempt to advance some suggestions on how to continue building
in the future processes that help develop the strategic idea implied by
the concept of Latin American integration.
II. A fifty-year experience
Half a century has elapsed since the first attempts to institutionalize
ambits and processes for the economic integration of the Latin American
As a strategic idea, the precedents of regional integration date back
to the 19th Century. However, the stage of concretion begins with the
negotiation of the Treaty of Montevideo, signed fifty years ago, in February
of 1960, which created the Latin American Free Trade Association (ALALC).
It was the birth of a process that has had multiple and varied expressions,
many of which have been sub-regional in scope. The original scheme had
a sub-regional outreach limited to the space then known as the "Southern
Cone", which encompassed the countries of the South of South America
and was centered primarily in the triangle formed by Argentina, Brazil
and Chile (the so called "ABC").
The addition of Mexico extended this initiative of commercial integration
to the Latin American geographic space. It is possible to consider that
such expansion, initially unforeseen, contributed, together with the use
of an instrument that was not originally contemplated either -that of
a free trade area-, to the growing distance between the project expressed
in the Treaty of Montevideo of 1960 and what later translated into reality.
Simultaneously, the countries of Central America undertook their own process
of sub-regional integration, which also had deep historical roots.
Later on, the transformation of the ALALC into the Latin American Integration
Association (ALADI) through the Treaty of Montevideo of 1980 implied a
substantial methodological change and initiated a new stage in the process
of regional integration. It resulted from the corroboration that a free
trade area in the sense defined by article XXIV of GATT between an heterogeneous
group of countries -at that time less connected and more distant than
today- with strong asymmetries in their size and degree of development
was nonviable in practice, at least as it had been established in the
cited multilateral legal instrument. A similar corroboration happened
decades later with the failed attempt promoted by Washington to institutionalize
a hemispheric free trade area.
Said transformation implied accepting that the existing differences required
partial approaches with multiple speeds and of variable geometry. It involved
recognizing the realities of different sub-regions and sectors with interdependence
densities and interests that not necessarily applied to the rest of the
countries. The original approach of ALALC whereby the regional instruments
were the norm and the sector and sub-regional ones the exception was thus
reversed. On the contrary, what was partial -group of countries or particular
sectors- became the main norm, with the regional level as a frame and
at the same time a final aim not fully defined in its contents or terms.
Due to the Enabling Clause, a result of the Tokyo Round concluded in 1979,
such approach became reconcilable with the GATT rules. Since then, ALADI
has had great relevance for the development of preferential trade between
Latin American countries, including the respective sub-regional and bilateral
agreements, in a way that is compatible with the commitments entered into
within the current global multilateral ambit of the WTO.
In this way the path was opened for significant transformations in the
strategy for regional integration, which evolved in the following years.
Among other relevant events during this new stage, which lasts until the
present time, the original Andean Group -born in 1969 as an ambit for
differentiation from the central role of Argentina and Brazil in the former
ALALC- turned into the Andean Community of Nations (CAN). The bilateral
integration process between Brazil and Argentina was initiated in 1986
with a strong emphasis on certain sectors, for example the automotive
one. Later on Mercosur was created -preserving the strategic preferential
relation between Argentina and Brazil-; Mexico was incorporated to the
North American Free Trade Area (NAFTA) and the process began for the realization
of bilateral or bi-regional preferential trade agreements between Latin
American countries and the rest of the world, starting with the US and
the European Union. Additionally, an interesting first precedent for the
conciliation of the integration of a regional geographic space and the
link with third parties was born through preferential trade agreements.
Such precedent was the result of the free trade agreement between the
Dominican Republic and Central American countries and the US. (CAFTA-DR).
The changes that were simultaneously taking place in the global context
had a significant impact at the inception and in the evolution of these
first stages of Latin American regional integration. This was so especially
during the last two decades, the post-Cold War world with a multi-polar
economic competition; the change in US global commercial strategy with
the promotion of its own network of preferential trade agreements; the
enlargement of what would become the European Union and the development
of its global strategy; the growing presence of emerging and re-emerging
economies -such as China-; the conclusion of the Uruguay Round; the creation
of the WTO and later the start and standstill of the Doha Round and the
development of production networks and transnational value chains have
been, among others, factors that have deeply altered the external environment
where Latin American integration, and particularly the South American
one, has taken place. We may also add to this list the deep economic and
political transformations that have occurred and continue to develop -also
with a differentiated reach- in the region and in each one of its countries.
South America in particular started to evince more density in the connections
between its productive systems, including the field of energy. Many of
its countries have had a remarkable evolution in their experiences at
the economic and political level. The relevant role that Brazil has acquired
is not a minor fact in the differentiation between what the region was
until the 90s and what it has become. This is a regional geographic space
in which, aside from the asymmetries in size, degrees of development and
economic power, there have been moments of blatant conceptual discrepancies.
Even the concept of integration has sometimes led to different interpretations
among the countries of the region.
In our opinion, the almost fifty years that have elapsed since the beginning
of the formal processes of Latin American integration provide a platform
and an opportunity to reflect on its future. The new international context
that is being made manifest by the recent global financial crisis and,
in particular, by the evident shifts of relative power in the global international
scenario also prompt us to do so.
III. What lessons can be learned?
After over five decades of Latin American integration processes there
are some important lessons to be learned. Some of them are essential if
we want to make a realistic and positive analysis of the phenomenon of
regional integration. These are:
- No single model exists for the methods to be used for the institutionalization
of an ambit and an integration process between nations that share a
regional geographic space. Experience shows -not only in Latin America
but in other regions including most certainly European integration-
that in each concrete case the participating countries combine diverse
techniques for the integration of their markets and different joint
work methods, including those used for decision-making and for the creation
of rules. As was mentioned before there are, for the Contracting Parties
of the GATT and nowadays for the members of the WTO, certain conditions
born from the commitments undertaken in the global multilateral ambit,
especially those stated in article XXIV of the GATT or, for developing
countries, those included in the Enabling Clause and article V of the
GATS, if services are to be included.
- These are not linear processes. On the contrary, Latin American reality
shows that voluntary integration processes between sovereign nations
that share a regional geographic space have a gradual and mostly winding
evolution. There are regressions and prolonged standstills, but failures
are hardly ever formally recognized, least definite ones. What happens
normally is that the corresponding process undergoes a great transformation,
in actual fact or formally, as was the case for example with the former
ALALC or the Andean Group or even with Central American integration.
Often, crisis originate leaps forward or cause a metamorphosis of the
original plans and engagements, a fact that produces certain bewilderment
in those observers prone to interpretations based on theoretical models
or the experience of other regions.
- There is no final result such as, for example, the full integration
of the political and economic systems of the participating countries.
They may be considered as processes under continuous construction which
never actually reach a point of no return that is truly irreversible.
They are processes full of contradictions. In fact they often show a
state of confusing dialectic tension between facts and attitudes that
may result in a future of conflict and confrontation and others which,
on the contrary, are the expression of the logic of integration and
cooperation. This coexistence of contradictory tendencies is what makes
it difficult to decipher the relation between countries that share a
regional geographic space and the membership of a formal process of
Several other lessons may be gathered from the accrued experience. One
of them refers to the importance of reconciling political leadership with
technical savvy in the development of an integration process. This implies
a direct involvement, at the highest political level, in the design and
follow-up of the corresponding strategy and its roadmaps and, at the same
time, a suitable technical formulation in terms of objectives, instruments
and work methods. Leaving the construction of a process of integration
solely in the hands of political leadership or, worse still, only to the
technical levels, could later have a flawed impact on its effectiveness,
efficiency and social legitimacy.
Other lesson refers to the need to constantly adapt the objectives and
instruments of a process of integration to the changing realities and,
at the same time, to preserve certain degree of predictability in the
ground rules and collective disciplines that can be fulfilled.
The third lesson is related to the importance of the fact that each country
has its own national strategy vis à vis the corresponding integration
process. This factor is of the essence. The idea that the path towards
the regional starts with a correct definition of the respective national
interests is corroborated by the concrete experience of the last years.
The countries that have had the clearest idea of their national interests,
helped by the institutional quality that shaped their definition, are
probably those who have taken the most advantage of the regional integration
agreements. Additionally, it becomes a safeguard against the emergence
of some sort of integrationist romanticism according to which the so-called
hypothetical supranational rationalities would constitute the guiding
force behind any given regional process.
IV. A new stage in Latin American integration?
Is a new stage of Latin American regional integration beginning now?
Certain elements would indicate so. There are several factors that would
be encouraging it.
The first factor is the emergence of a plurality of options for the insertion
of each Latin American country in world markets and in the international
system resulting from the growing number of relevant players in every
region and the shortening of all kinds of distances. The second factor
is that it is understood that such options may be utilized simultaneously
for the development of multiple and cross partnerships. The third factor
is that it is feasible to develop, in the majority of the options, strategies
for mutual gain in terms of the trade of goods and services, productive
investments and the incorporation of technical progress, as long as the
respective country has a clear idea of its needs and what it can achieve
in the development of a strategy for its international insertion.
However, perhaps the main factor that drives towards new integration
modalities in the Latin American regional geographic space, as well as
in its multiple sub-regional spaces, is the growing dissatisfaction of
many countries with the results achieved by the processes currently under
way. This is evident in the case of the Andean Community (CAN) and also
in the case of Mercosur.
Such dissatisfaction can lead to at least two scenarios. The first of
them is one of integrationist inertia. It would imply to continue doing
the same that has been done until now, that is, not to innovate too much.
The risk is that the corresponding integration process becomes irrelevant
for certain countries. In such case it could result in a process that
only moves forward in appearance but that would increasingly show traits
of obsolescence and have little impact on reality. The second scenario
would result in some kind of foundational syndrome. This would mean discarding
what has been achieved so far -and in Mercosur and CAN this is much- both
in terms of shared regional strategy and in preferential economic relations,
and once more try to start anew.
There is, however, a third possible scenario. It is probably the most
convenient and achievable one. It would involve capitalizing on the accumulated
experiences and results, adapting the strategies, objectives and integration
methods to the new realities of each country, of the region, the sub-regions
and the world. Such adaptations would seem to be more necessary in the
sub-regional agreements, such as Mercosur of the Andean Community, than
in the broader frameworks of the ALADI -whose function in the plane of
regional trade is still current- and UNASUR -which however still has to
prove its real efficacy.
What are the accumulated assets to be preserved for example in the case
of Mercosur? Firstly, the acknowledgement of the integration process as
an essential factor for governance in terms of the prevalence of peace
and political stability of a given regional or sub-regional geographic
Secondly, the stock of economic and trade preferences already agreed
and that today influence the reciprocal flows of trade and investment.
In the case of Mercosur, such stock accounts for many of the productive
investments of the last decades, either by multinationals based in third
countries or by the so called multi-Latins. This has enabled the development
of a weave of trans-border productive chains of growing density, especially
in certain industrial sectors of which the automotive is probably the
most relevant example.
Thirdly is the value of certain "brands" in the international
image of a group of countries. The "Mercosur" brand had its
heyday when the region was shaken by the effects of the Asian crisis during
the second half of the 1990s. The fact that it is still a distinct name
in the national identification documents, including the passports, of
the citizens of the countries that are full members is not something to
Which are the adaptations in the strategies, objectives and methods of
an integration process such as Mercosur that can result from the new international
scenario and, especially, of its most probable future evolution?
The first refers to the reinforcement of flexible methodologies that combine
variable geometries, multiple speeds and sectorial approaches. As was
mentioned before, these will not always fit the models of other regions
nor follow text-book theories. However, they may work out and be compatible
with the flexible regulations of the GATT-WTO legal system.
The second involves institutions and ground rules. In order to organize
clearly defined national interests between countries with different dimensions
and degrees of development, it would seem essential to place the stress
on the ability to formulate common visions and interests through bodies
that have certain degree of technical independence from the respective
governments. These not necessarily need to be based on the model of supranational
institutions originated by the European experience nor be complex or expensive.
On this regard, the functions of the WTO Director-General could represent
a precedent more attuned with the national sensibilities.
Finally, the third adaptation is related with the importance of having
in each country a minimum group of businesses with ofensive interests
in the markets of the region or sub-region, which implies the capability
to delineate internationalization business strategies even at a global
scale. This is a necessary condition in order to move forward in a relatively
balanced way towards the ever valued objective of productive integration.
It is still difficult to anticipate if the adaptation scenario will take
place in the near future of Mercosur and other Latin American integration
processes that have suffered in the last years an erosion of their effectiveness,
efficacy and social legitimacy. However, the path of the last fifty years,
with its progresses and its disappointments, anticipates that regional
integration will continue to be valued by the countries and their respective
public opinions. At least there seems to be certain consensus in that
the costs of non-integration could be too high. This helps predict that
there will still be a sinuous progress, with advancements and setbacks,
unorthodox but persistent, towards a greater degree of integration at
every level -not just the economic- between the countries of the region
and of its different sub-regions. On this regard, it is even possible
to imagine a greater resemblance to what has been the Asian experience
during the last years and, eventually, the future evolution of European
integration after the recent Euro crisis. By this we mean integration
that is propelled from the bottom-up by the effect of the growing social
and business networks that are evidence of the increasingly dense web
of crossed interests facilitated by factors such as a greater physical
connectedness, the integration of productive chains and the perception
of common external challenges.
V. The case of Mercosur: some shortcomings
A final word on Mercosur's shortcomings which have sometimes caused questionings
and dissatisfaction. Without overlooking others, and due to its relevance,
in this opportunity we will mention the issue of its legal and institutional
quality. On this regard, it can be said that in practice the precariousness
of the ground rules is one of the factors -albeit not the only one- that
has contributed to a slow but persistent process of deterioration of Mercosur's
image, credibility and even social legitimacy.
In this sense, something that has characterized regional integration
processes since they were formally encouraged in the 50s may be observed.
Both in the history of the ALALC and later in that of the ALADI there
was evidence of a strong tendency to consider that rules were to be obeyed
in the measure that was possible. And what was possible was often determined
by each member country in relation to their frequent economic emergencies.
What was common then was to see that non-fulfillments were compensated
by other non-fulfillments. The result was that, in the name of pragmatism,
the image that citizens, investors and third parties had was of a "dummy"
economic integration, meaning that due to the precariousness of its rules
it had enormous difficulties to penetrate reality and was limited, in
many cases, to just an appearance.
With the creation of Mercosur by the Treaty of Asuncion (March 1991)
it was understood that such precariousness would be overcome, at least
with regards to its main demandable rule, stated in Article 5 and developed
in Article 1 of Annex I. It explicitly establishes the complete elimination
of customs duties, charges and other equivalent restrictions in foreign
exchange, both for imports and for exports. It also eliminates restrictions
imposed "unilaterally" by a State Party. Even though the original
period for its compliance was December 31, 1994, circumstances led to
it being deferred until the end of 1999. Later on, Decision CMC 22/00
gave way to a sort of "filibustering" in the application of
different types of unilateral non-tariff restrictions that had already
been seen before both in the ALALC and the ALADI.
Without overlooking other cases the issue becomes current when the partners,
especially Brazil and Argentina, demand each other the application of
non-automatic licenses in their bilateral trade. This has happened quite
frequently, even in recent times. It has been claimed that these are consistent
with the corresponding WTO regulations, which in principle is true, although
it may be debated if in their implementation such consistency has also
been maintained by both parties. In the case of Brazil the measure has
been explained as being a result of those applied by Argentina. As a matter
of fact, it has been possible to apply them because their internal rules
allow it by not excluding products coming from the Mercosur area form
the possible non-automatic licensing. In any case, it is not usually mentioned
-at least in public statements- that such licensing constitutes a restriction
which is not authorized by the current Mercosur regulations. In this way,
by applying non-automatic licenses -beyond the commercial reasons invoked-
they are contributing to the weakening of the rules that govern intra-Mercosur
In fact the compensation for non-fulfillment of what was formally agreed
by the partners reaffirms a culture of legal precariousness that erodes
the fundamental asset that was sought after with the creation of Mercosur
and that consists, precisely, in safeguarding the member countries against
unilateral behaviors that imply, in practice, the protectionism of their
own markets. Such insurance against unilateral protectionism has the purpose,
as is well known, of avoiding the negative economic impact generated by
the uncertainty in the access to the respective markets, in particular
in relation with the decisions for productive investment.
Concretely, the economic consequences of the predominance of precarious
ground rules result in a weakening of the advantages originated by the
decision to invest in any member country in terms of the enlarged market.
As can be seen in other regions where countries with asymmetries in economic
dimensions and relative development coexist, in practice this usually
benefits the country with the largest internal market.
The most disturbing fact is that the interpretation of which are the
rules that are to be obeyed and which not is left to the unilateral point
of view of each member country. In this way there is a high risk of seriously
damaging one of the fundamental pillars of the legal architecture of Mercsour,
Article 2, which explicitly establishes that "The common market shall
be based on the reciprocity of rights and obligations between the States
Parties". If every member country may unilaterally decide which are
the obligations it must follow or not, it becomes extremely hard to assess
if the principle of reciprocity has been honored. In fact, a situation
may arise where a member country chooses not to comply with the obligations
that it considers are not convenient while the other countries are indeed
observing them, or are unable to stop doing so due to the characteristics
of their own internal legal order.
Herein is possibly the main crack that is affecting the solidity of Mercosur's
structure and that might result in a gradual, albeit imperceptible, deterioration
of mutual trust, which is the main support of the quality of the political
relations between the partners. If the rules that imply rights and obligations
may or may not be abided at a member's own discretion how can there be
a guarantee for the other partners that the balance between national interests
that led to the approval of the Treaty, as well as of its derived norms,
will not be seriously affected?
This is not a trivial issue if we consider that other economic and even
political factors could trigger centrifugal forces in the integration
process that has allegedly been institutionalized by Mercosur. These have
become evident in relation with the growing pressures that exist to establish
bilateral and preferential negotiations with third countries. Uruguay
raised the issue at one time and most recently such trend has been discussed
intensely in different sectors of Brazil. José Serra the presidential
candidate for this year's elections has repeatedly raised the subject.
Until now such possibility is excluded, at least for the preferential
trade negotiations of a member country with a third country or group of
countries, by Decision CMC 32/00 of the Mercosur Council. The consensus
of all member countries would be needed to change this.
Transforming Mercosur into a free trade area, instead of the current
customs union, has been proposed as a possible solution for its multiple
problems. However, it should be noted that such solution would only be
feasible through the amendment of the Treaty of Asuncion, given that in
its Article 5 it explicitly contemplates the validity of a common external
tariff, a constituent element of a customs union. Moreover, the Protocol
of Ouro Preto also mentions explicitly "the introduction of the customs
union as a stage in the establishment of a common market". It would
be easy to anticipate that a negotiation to modify the Treaty of Asuncion
in such a fundamental constituent aspect would have evident connotations,
both technical and political. In practice, it could imply a complete renegotiation
of everything, which might even affect the current stock of trade preferences
that, is spite of Mercosur's deterioration, still has significant value
for many businesses in the four member countries.
Certain innovations in the ground rules, however, would be easier to
achieve and would allow for an adaptation of Mercosur instruments to the
new international realities and of its member countries. These would enable
to introduce, as was previously mentioned, elements of variable geometry
and multiple speed in its functioning. One such innovation would be the
regulation of the restrictions compatible with the adequate functioning
of a customs union. Thus they would not be "unilateral restrictions"
-such as the ones being applied currently and referred to by Article 1
of Annex I of the Treaty of Asuncion- as they would be adopted under the
conditions established by common rules. These regulations could be based
on those of the WTO with regards to automatic and non-automatic licenses.
A second innovation would be to modify Decision 32/00, anticipating the
possibility of preferential bilateral trade negotiations with third countries,
at least in the cases of Paraguay and Uruguay and under the conditions
established by the new common rules. The precedent of the trade negotiations
with Mexico and even with the countries of the CAN could be evaluated
and eventually taken into account. However, this is a step that would
require sufficient guarantees that it would not imply reducing to zero
the respective trade preferences granted between partners. Finally, the
third innovation would be to establish a system of safety valves for Mercosur
that would also allow, under special circumstances, to temporarily withdraw
products from unrestricted free trade. Neither in the current legal structure
of Mercosur nor in that of the WTO (Article XXIV of GATT-1994) are there
any significant obstacles for such regime.
In order to appreciate the importance of the innovations as the ones
suggested, in the case of Mercosur it is necessary to remember that its
construction is based on the solidity of two fundamental pillars. One,
centered in the political, is that of the quality of the strategic alliance
between Argentina and Brazil. This is based on the mutual trust that began
to flourish when, in the 1980s, a scenario characterized by the logic
of conflict and with clear implications in terms of the nuclear development
of both countries, was reversed. The other, centered in the economical,
is that of the trade preferences compatible with the global multilateral
commitments of both countries within the framework of the current WTO
and aimed at facilitating a joint process of productive transformation
and the competitive insertion in world markets. Both pillars complement
each other and it would be difficult that one lost strength or disappeared
without substantially affecting the other.
This is the reason why the views on Mercosur need to be, at the same
time, realistic in the sense of valuing what was accrued as experiences
and assets, and positive, in order to indicate possible courses of action
that may help overcome the existing shortcomings.