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SOUTH AMERICA: Mercosur - Overly Ambitious?
By Diana Cariboni
MONTEVIDEO, Dec 10 (IPS) - Many of the hurdles facing South America's
Mercosur trade bloc in its attempts to deepen the integration process have
to do with the gap between its ambitious aims and the institutions and other
instruments that have been put in place to achieve those goals.
When it was founded in 1991, Mercosur (Southern Common Market, made up of
Argentina, Brazil, Paraguay and Uruguay) "established the objective of
strengthening economic integration, intraregional trade and development,"
said professor of international trade Marcel Vaillant.
But another aim was to become an instrument for improving the insertion of
its members on the international scene, he added in an interview with IPS.
Mercosur is attempting to build a customs union - a rare form of integration
that involves the duty-free circulation of goods among member countries and
a common external tariff for imports from outside the bloc.
"There are 220 trade agreements registered in the World Trade Organisation
(WTO), and only 10 of them are customs unions," said Vaillant, with the
economics department in the faculty of social sciences at the University of
the Republic of Uruguay.
"It's like building a new nation in the sphere of trade and it requires a
deep level of commitment and harmonisation of policies," he added.
But Mercosur has other ambitious goals as well: a structural convergence
fund to assist the smallest members of the bloc and reduce the asymmetries,
the regulations for which were approved Friday at the 29th Mercosur summit
in Montevideo, or common environmental and animal health policies.
"There are many policies that don't work unless they are regional," such as
the defence of a shared natural resource like the Guarani Aquifer, or
measures to fight foot-and-mouth disease, for which specific instruments are
needed, said the analyst.
The bloc's technical secretariat has just four advisers. "The half-yearly
reports that the technical advisers have to submit" are confidential, the
information does not circulate, and in many cases they end up unread at the
bottom of a drawer in one of the member nation's foreign ministries," said a
Mercosur source who preferred not to give his name.
There are very few high-level meetings that are attended by all of the
relevant senior officials from the various member countries, he told IPS.
When Mercosur was first conceived of, the countries tried not to create new
structures or accentuate the existing problems of credibility that had
arisen from a long tradition of failed attempts at integration in Latin
America.
"Questions of fiscal austerity also weighed in, which did not benefit the
creation of new institutions," said Vaillant.
This approach worked at first, when the focus was on eliminating reciprocal
trade barriers. But as the integration process moved forward and the members
worked on building common policies, the need for new institutions became
more and more obvious.
"If you want to pound in a nail and you have a hammer, great. But if you
then want to use screws and build a wall, and the only tool you have is a
hammer, things aren't going to work," he said.
However, it's not a question of creating more red tape, he stressed.
Mercosur is involved in negotiations in more than 200 different areas, and
specialised departments already operate in the member nations' foreign
ministries.
"It's about changing the bureaucracy, with an intergovernmental, permanent
and specialised structure that is non-supranational in character," said
Vaillant.
In addition, he said, the six-month rotating presidency should be
lengthened, and certain functions should be delegated to common structures,
he added.
The Mercosur parliament, approved by the presidents meeting in Friday's
summit, could be beneficial, because it implies diversifying the actors
involved in the process and incorporating new visions, as well as
encouraging political parties to take a greater interest in questions of
integration.
Meanwhile, the ideological affinity of the current left-leaning governments
of Argentina, Brazil and Uruguay, which at one point gave rise to
speculation that it could help overcome obstacles to integration, has not
brought about significant changes.
The problems faced by the countries with respect to the integration process
are structural and permanent, such as national interests, said Vaillant, who
believes the difficulties have neither gotten worse nor better.
Tensions have run high among the "progressive" members of the bloc. In his
address on Friday, Uruguayan President Tabaré Vázquez complained about
"arrangements" agreed on by the two biggest partners, Argentina and Brazil.
But the business community is not opposed to integration, said the analyst.
"The private sector has been taking advantage of the opportunities that
Mercosur continues to offer. Relations continue to exist, business continues
to be done, and if the option of doing away with Mercosur were brought up
today, in Uruguay there would be a huge backlash," he added.
Trade between Argentina and Brazil grew significantly over the past few
years, and even a small country like Uruguay has experienced "steady
investment and structural changes in terms of logistics, improvements of the
port system, and highway infrastructure" that has been key to both
extra-bloc trade and commerce among the bloc's partners, said Vaillant.
He played down the notion that the bloc is in the midst of an explosive
expansion, with the incorporation of new members, like Venezuela, whose
request to become a full member was formally accepted at Friday's summit.
Chile and Bolivia became the bloc's first two associate members as far back
as 1996 and 1997, and the Mercosur negotiations with South America's other
big trade bloc, the Andean community, had already begun in the second half
of the 1990s, although "they crystallized in the past few years," he noted.
The neogiations with the Andean Community - comprised of Bolivia,
Colombia, Ecuador, Peru and Venezuela - have been complex.
Vaillant pointed out that it takes a long time to create a free trade zone,
and that the aim now is to achieve common preferential tariffs between the
members of the customs union and third party countries, "which was not a
goal in the past."
"Today Mercosur has common accords with Chile and Bolivia (practically a
free trade zone), and a relatively lengthy convergence programme for
bringing about a free trade zone with the rest of South America within 15 to
18 years," he said.
With the launch of the South American Community of Nations at a 2004 summit
in Peru, Mercosur took on an even higher profile as "a big international
relations operation," said the analyst.
The bloc is also involved in negotiations with developing nations like
India, Egypt, Morocco and South Africa, as well as countries "with little or
no economic significance," while it faces major hurdles in reaching accords
with industrial powers like the United States or the European Union, with
which Mercosur has been involved in negotiations for 10 years.
If the number of free trade accords signed by Mercosur is compared to the
list of agreements negotiated by others in the region, like Chile or Mexico,
the bloc would appear to be lagging.
The comparative advantages of the Mercosur countries (especially Brazil)
"are concentrated in the very sectors that are targeted by the protectionist
policies of the industrialised nations," Vaillant observed.
For the EU, a free trade deal with Chile or Mexico does not involve
significant internal adjustments. But an agreement with Mercosur "is
problematic, not only because of questions of scale or size, but because the
South American bloc's comparative advantages are in areas that coincide with
most of the European bloc's protectionist policies," he underscored.
That is seen not only in agribusiness and livestock breeding, but also in
the case of steel and other industries, he said.
In Vaillant's view, trade between South America or Mercosur and the EU is
"19th century" and "almost caricaturistic": raw materials with no value
added in exchange for manufactured products with a high technological
content.
Although there are tensions in the same sectors, South American goods
exported to the United States have a greater technological content overall.
(END/2005)
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