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  Félix Peña

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  La Nación, Foreign Trade Supplement | April 23, 2013
Mercosur-EU: options if the goal is not achieved

It is assumed that by the end of this year the EU and Mercosur will exchange their offers for the access to markets. That is the goal agreed at the last bi-regional meeting held in January in Santiago de Chile. Official signals originating in Mercocur member countries -by case, recent statements by Chancellor Patriota form Brazil- feed the idea that, this time, it would be achievable. Other signs, not always public, originating in businessmen and the academics linked to them -especially in Brazil and Uruguay and, sometimes, in the EU itself- contribute to raise some doubts.

These are founded doubts if we take into account both the fifteen years since the negotiations were launched and the ups and downs that have been observed on its way; the changes introduced in the map of incentives to negotiate -especially on the European side after the ghost of the FTAA disappeared--, and the emergence of new factors that may adversely affect the interest to continue using the format originally proposed -in particular, the effect on Mercosur countries of the idea of the mega-interregional preferential trade agreements, both on the side of the Pacific and the Atlantic.

It is relevant then to consider the options open in the event that the goal for this year is not achieved.

The first option would be to continue negotiating as before, setting new deadlines. It happens frequently in international trade negotiations as evinced, among other recent experiences, with the EU-India negotiations or those of the Trans-Pacific Partnership (TPP). A variant could be to agree on a modification of the self-imposed goal of achieving a high percentage of trade coverage included in the trade liberalization program. Nothing would prevent it, at least with a correct interpretation of GATT rules (Article XXIV). It implies however a strong political will to generate sufficient flexibility in the technocratic terms.

A second option would be to abandon the goal of a free trade agreement between the two regions. A variation of this option could lead to negotiate free trade agreements between the EU and those Mercosur member countries that were interested -eventually with several, but not all. It would involve formally abandoning the commitment to establish a customs union in Mercosur, taking it back to a free trade area. Business institutions and experts have sometimes proposed this. Of course such a variant would require previously amending the Treaty of Asuncion. It is not hard to imagine the difficulties that this would entail and the effects it could have on the quality of the relationship between Mercosur partners and, most notably, between Argentina and Brazil. Thus, this would not seem an option that the respective governments would want to favor.

Another more sophisticated variation of this second option would be that each Mercosur member country is able to negotiate strategic partnership agreements with the EU that, in their development, include instruments and commitments on a wide number of issues related to bilateral economic relations (for example, all those issues that can affect trade and investment flows, productive integration and technological cooperation) excluding tariffs. The advantage of this option, which at times seems to be the preferred one among business sectors especially of Brazil, is that it could be presented as consistent with the rules of Mercosur (Article 1 of the Decision CMC 32/00) and therefore with the apparent preservation of the strategic idea of sub-regional integration. Its disadvantage is that it would be very difficult to explain why such variant could not be carried out with the participation of Mercosur as a whole and, in that case, it would imply a strong weakening of the distinction "us-them" which is the basis of Mercosur's foundational strategic idea, especially in what has always been its main core, namely the Argentina-Brazil relationship.

Finally, a third option could be to bring back the idea of a bi-regional negotiation to its original formal framework. Its seems the most advisable in case that the goal set for this year is not achieved or that it is not possible to set a new deadline to achieve it. It would imply activating an instrument that seems to have fallen into oblivion, by dint of not using it. We are referring to the Framework Agreement of Cooperation between the EU and Mercosur signed in 1995 and still in force (see the text at In Argentina it was approved by Law 24.694 enacted in September 1996. The negotiations for the bi-regional free trade agreement were launched within its framework. But a simple reading of the text helps appreciate the breath of its coverage, which far transcends the idea of a simple free trade area. Its subject-matter matches the main issues on the EU-Brazil bilateral agenda. It also contains a review clause (Article 23) which, if used well, would even enable to move forward with variable geometry formats. And it creates a Cooperation Board with broad powers to become, eventually, the forum in which to design a new stage of the bi-regional relation. It could even foresee those flexibilities and multiple speeds that may be required by the new global realities, those of each of the two regions and those of the bi-regional space.

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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