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SOUTH
AMERICA:
Mercosur - Overly
Ambitious?
Diana
Cariboni
MONTEVIDEO, (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.
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