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The distinction between the easy (the launch of the idea of integration
among a group of countries and the signing of the founding agreements)
and the difficult (translating into reality, over time, what was agreed)
in a process of integration seems to be implicitly present in two paragraphs
of the speech delivered by Ollanta Humala, President of Peru, at the signing
of the Joint Statement of the VIII Summit of the Pacific Alliance in Cartagena
de on February 10, 2014 (http://www.presidencia.gob.pe/).
The first paragraph refers to what historical experience indicates is
the easiest. That is, to set ambitious and attractive goals. These goals
are usually where media strategies focus in order to charm and generate
enthusiasm in the citizens, in those making decisions for productive investment
and in third countries. It is the paragraph where President Humala said:
"The Pacific Alliance was created as a space of agreement, friendship
and peace, not of conflict or confrontation with anyone. And he added
that "the Pacific Alliance is the expression of regional productive
forces come together today under one agreement and that will travel together
around the world" (our own English version).
The second paragraph recalls what is really difficult. That is, to get
what was promised to penetrate reality and make it sustainable and effective
due to its results. President Humala said: "The Pacific Alliance
now enters a new stage that I think will be more difficult, it is the
stage to apply all that has been signed, to deepen and expand this partnership
and to provide all the tools required by our productive forces so that
they can utilize the alliance" (our own English version).
This is a distinction based on historical experiences and, more recently,
on those of the EU and Mercosur, beyond the obvious differences that exist
in their respective contexts, motivations, objectives and methodologies.
Such experiences teach us that when building an integration space between
sovereign nations, whatever their objectives and modalities, it is possible
to distinguish, in relative terms, moments that are easier and moments
that are harder. It seems important to remember this distinction in order
to avoid the phenomenon of inflated expectations that later cannot be
met, which is usually at the origin of the curve of disenchantment, i.e.
a trend towards a gradual deterioration, sometimes imperceptible, of illusions
that, if not reversed in time, can lead to frustration and even to the
actual failure of the integration process, even if it still subsists on
paper.
Hence the relevance of the question posed in our previous Newsletter:
what are the risks of disenchantment and its costs considering its possible
impact on the factors that led a group of countries to develop an integration
project? (See http://www.felixpena.com.ar/).
The main risk of disenchantment, perhaps the one with the highest costs,
is that it can erode the deep underlying reasons that led countries sharing
a geographical space to adopt a strategy of working together with a long-term
vision while preserving their sovereignty and national identity. These
reasons are related to political stability, peace, democracy and development
in the "neighborhood" in which they coexist, and also with the
idea of strengthening the ability to negotiate and compete with other
countries. In a setback in these aspects lie the main danger-and the costs-of
disenchantment that can translate into frustration and, finally, into
an attitude of rejection of the integration process itself. That is to
say, in an existential crisis.
Disappointment may then erode the positive effects that a process of
integration between neighboring countries should supposedly produce through
the prevalence of a culture of dialogue, an understanding between people
who share the same geographic space, in brief, the essential conditions
for peace and political stability in a region. This would be the complete
opposite of what led to the chain of events and behaviors that account
for the beginning of the "Great War" in 1914. (See a recent
article by Frank-Walter Steinmeier, the current Minister of Foreign Affairs
of Germany and leader of the Social Democratic Party and especially the
book by Margaret MacMillan. Both references have been included in the
Recommended Reading section of this Newsletter).
Such erosion is what, at times, seems to be present in European countries
on the eve of the election of members of the European Parliament to be
held next 25 May. These are elections that have acquired an important
political significance precisely because their results could reflect the
full depth of the public disenchantment with the idea of Europe. Such
disappointment is expressed in the growth of "Euro skepticism"
and this could manifest with relative strength in the May elections (on
the disenchantment of the Europeans, see the article by Claudi Pérez
published in El Pais newspaper, Madrid, February 9, pages 2 and 3, and
on http://internacional.elpais.com/).
As also pointed out in our Newsletter of last January, it is the founding
moments of an integration process, or of preferential trade agreements,
where the seeds that later lead to disillusionment can be found. The originators
of the corresponding founding agreement, often times due to political
reasons, tend to create excessive expectations about the possible outcomes.
That is why currently in many countries and regions there is a growing
demand in the civil society and its representative institutions for greater
transparency and participation in the respective negotiations. There is
a demand to have full knowledge of the details and the commitments that
are effectively made. We are all aware that there are winners and losers
as a consequence of these negotiations. And it is also known that such
a distinction often originates in the fine print or the details of the
agreements, precisely "where the devil hides" as they say in
the world of negotiations. Classic examples of this in preferential trade
agreements are the specific rules of origin and the different mechanisms
that allow the exemption of products, sectors or services, even indefinitely.
This growing demand for transparency and social participation has been
evinced in relation to current regional and inter-regional trade negotiations
such as those of the Pacific Alliance, the Transatlantic Trade and Investment
Partnership (TTIP) and the Trans-Pacific Partnership (TPP). It is a demand
geared towards knowing what is being negotiated and how what is agreed
will be carried out. In this regard, an experienced voice -that of Rodolfo
Severino, former Secretary General of ASEAN between 1998 and 2002- has
stated the need for participants to be honest in the debate on the future
of the integration of Southeast Asia when defining what can and cannot
be done in the new stage of ASEAN (on http://www.eastasiaforum.org/).
Transparency and broad participation are then conditions for the debate
that a country should undertake when defining how to address a desirable
and possible integration process based on its national interests. This
also applies when the need to discuss how to recycle the corresponding
process is recognized if there is proof that the eventual disenchantment
can be deep and based on concrete facts.
It is precisely a sincere, transparent and broad social debate what Mercosur
would need today (in this regard see our article "Mercosur: terapia
de bloque para escaparle al desencanto", in the Foreign Trade Supplement
of the newspaper La Nación, February 11, 2014, pages 4 and 5, on
http://www.lanacion.com.ar/).
An honest discussion of the options in Mercosur has to take into account
what is essential from a political perspective that transcends the economic,
especially if envisioned from the perspective of Planalto in Brasilia
and Casa Rosada in Buenos Aires. Since its beginning, with the agreements
of Presidents Alfonsín and Sarney-the original core of Mercosur-,
the essential has been the impact of the quality of the relationship between
Argentina and Brazil at all levels on democracy and the political stability
of the region. Hence the importance of the nuclear issue without which
it is very difficult to understand the path that effectively led to the
bilateral agreements first and later to the creation of Mercosur. It is
in this framework that we can then appreciate the value of effective trade
preferences on national strategies for productive transformation and competitive
insertion in world markets. And this framework also allows us to appreciate
the value of the South American scope that Mercosur always aspired to
have. Let us remember that in the founding plans, besides the four countries
that signed the Treaty of Asuncion in 1991, the participation of Chile
as a full member (and not just as and associate) was assumed. But in order
to be sustainable, this South American scope requires the guarantee of
conditions for the mutual gain of all member countries, whatever their
economic dimension or level of development.
It is debatable whether the disenchantment observed, especially in some
member countries, is justified or if it's social base is really wide.
But simply reading the newspapers of member countries in recent months
indicates that at least the illusion of the initial moments is fading
(among other recently published articles on the case of Mercosur, see
that by Mauro Laviola published in the newspaper O Globo de São
Paulo on February 13, 2014, entitled "Mercosul, uma mentira institucional".
The author is Vice-President of the Association for Foreign Trade of Brazil).
This also appears to be happening in third countries or regions with which
Mercosur hopes to negotiate to intensify mutual trade and investment flows.
Specifically, an erosion of the image of Mercosur as a relevant, credible
and therefore attractive process in terms of productive investment and
potential negotiations can be observed in the EU. At least in appearance,
the current situation of Mercosur is presented as one of the reasons that
would lead to seek a multi-speed bi-regional agreement or, directly, bilateral
agreements with Mercosur member countries, as in the case of Brazil. A
deeper analysis of the issue would imply more sophisticated and complex
ramifications, where all kinds of factors would intersect and not just
the relative position of Mercosur.
The debate on Mercosur here suggested would need to take place at the
same time within countries and between member countries, and also between
social and productive sectors. To be honest it should begin with a diagnosis
of the frustrations and continue with the identification of possible concrete
and real options. Assessing frustrations involves imagining what would
have happened if the integration had not been formulated and developed
as it did. For example, if it had not included a common external tariff.
If the results would have been similar in terms of trade, investments
and public image, then it would be possible to conclude that perhaps the
problem lies not necessarily in Mercosur instruments. But it also involves
evaluating the feasibility of any "B plans" in the perspective
of each member country. In that regard, it would be essential to avoid
voluntarism -what is desired and not necessarily what can be done- and
one-dimensional approaches, for example, including only the economic and
not the political dimension, or vice versa. It would be voluntarism to
imagine that a country of the region can minimize the importance of the
geographical reality and its geopolitical implications, especially in
an era of strong dynamics and tensions in the competition for world power
and markets, with possible repercussions for the Latin American region.
Which might be the relevant issues to be included in a sincere debate
on Mercosur and its options? The following three would seem to have top
priority and also allow for multiple unfoldings.
The first concerns the global context. It involves a diagnostic of the
challenges and opportunities posed to each member country by the profound
changes that are taking place in global power and global economic competition.
An assessment of the external context can be a powerful factor that stimulates
convergence of views and interests within and between countries. Mostly
ECLAC has alerted on the convenience of the articulation between the countries
of the region in order to compete and negotiate better at a global level.
But in a current world with multiple options for the international insertion
strategy of any country, it is not surprising that members of Mercosur
wonder about the inconvenience of being bound by commitments of regional
scope. "Mercosur ties us" is a phrase often heard in member
countries. The question would then be to debate whether a country has
a realistic and more profitable plan B -and not just in an economic perspective-
to the idea of insertion in the world based on Mercosur.
The second issue concerns the scope of the commitments made for the future
and how they could enhance the ability of each country to attract productive
investment, strengthen the exchange of goods and services in the region
and with the world, and generate incentives for transnational productive
articulation through different variants of value chains. The question
would then be to discuss the added value that, in terms of productive
development, may result for each country from sharing a space of regional
integration with credible and effective rules.
The third question concerns the institutional architecture of integration
and the methodology used for working together. In that regard, it would
be convenient to take advantage of: i) the broad and poorly detailed nature
of the founding legal commitment of the Treaty of Asuncion; ii) the fact
that there is no obligation in an integration process to follow a pre-established
model and that the WTO rules -Article XXIV of GATT and also its Enabling
Clause- are ambiguous and imprecise, and also iii) the possibility of
capitalizing on the accumulated experiences of several decades of regional
integration, of LAFTA-LAIA, of the bilateral agreements between Argentina
and Brazil, and of Mercosur.
The question would then be to debate how to develop institutions and
work methods that help sustain, over time, the balance between various
national interests, between short-term requirements and long-term visions,
between simultaneous demands for flexibility and predictability, at the
moment of adapting to the economic and political dynamics of today's world
and of the domestic level of each participating country. And all that
taking into account possible conceptual dissonances when addressing realities.
It would be convenient to develop the suggested debate taking into account
the map of the current international trade negotiations, both in the global
multilateral level of the WTO and in the mega interregional spaces. Uncertainties
are present in almost all cases, either about their conclusion (the experience
of the FTAA or what is happening in the Doha Round), the effective date
of the signed agreement (the Havana Charter of 1948 which created the
World Trade Organization is an example), or the added value that, once
effective, the corresponding agreement generates with regards to pre-existing
trade commitments (this would be the case of the Pacific Alliance regarding
the commitments already made by its members in their partial scope agreements
in force within LAIA). Transatlantic interregional negotiations (TTIP)
and Trans-Pacific negotiations (TPP) also generate doubts either due to
their geopolitical connotations, the fate in the U.S. Congress of the
presidential authorization needed to conclude trade negotiations (the
Trade Promotion Authority-TPA), or because of the difficulties in reaching
agreements on sensitive issues such as intellectual property or protection
of investments, taking into account the disparity in size, views and interests
among the participating countries.
There is finally another question to be included in the necessary debate
which involves how to address the articulation of preferential trade agreements
that have taken place in the region. Today this issue has its epicenter
in the relationship between Mercosur and the Pacific Alliance, especially
since the last Alliance Summit, held in Cartagena, where the Additional
Protocol to the Framework Agreement that creates the Alliance was signed.
(On the VIII Summit of Cartagena and the text of the Protocol signed there
see http://www.mincit.gov.co/,
http://alianzapacifico.net/,
and the annex on specific country of origin requirements on http://alianzapacifico.net/).
The fact that the Protocol will require some time to actually come into
force may provide, during that period, an opportunity for an analysis
at the government, business and academic level of formulas and mechanisms
to provide the necessary convergence between two of the major systems
of trade preferences of the Latin American space. The common framework
of LAIA can be used for this purpose, despite the fact that the Cartagena
Protocol does not mention the 1980 Montevideo Treaty nor the commitments
therein agreed and that are, supposedly, still in force. Does this reflect
a recurring Latin American tendency to disregard the legal commitments
that have been made in the past? Wouldn't this trend be one of the main
reasons that lead to the curve of disenchantment and failure of the respective
agreements? Perhaps this is another topic for the necessary debate on
the future of Latin American integration.
In a first step, the aforementioned convergence could be based on the
system of rules of origin. The Protocol of the Alliance, in its Article
4.8, explicitly stipulates the principle of cumulation of origin which
is essential for a strategy with different modes of production linkages
of regional scope. The convergence could also be achieved in relation
to other important issues when promoting transnational production chains
and addressing trade negotiations with third countries or regions. One
of such issues is related with regulatory frameworks. Finally, the interest
in such convergence could result from the advantages that can be generated
for the region by a joint approach of integration in the multilateral
trading system, within the framework of the WTO and in the network of
preferential mega-agreements of regional and interregional scope being
developed in recent times, such as TPP and TTIP mentioned above.
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