Currently, the global scenario offers an array of simultaneous options for the insertion of a country in the world. One of the factors contributing to this is the growth of the urban middle classes in emerging countries, especially in Asia. This means a significant growth of consumers of middle-class income, empowered by their access to information and, therefore, who are aware of the multiple options available to them when selecting goods and services adapted to their needs, values, tastes and preferences. Added to this is the effect of the greater degree of connectivity between the different markets, as a result, among other factors, of the shortening of physical distances, the development of digital commerce and the proliferation of transnational value chains.

In a global scenario where there is a prevalence of actors that have access to multiple options (such as countries, citizens, companies and consumers), those who aspire to compete cannot ignore the question of how to adapt their strategy of international insertion to a reality in which competition for world markets will be increasingly dynamic. Therefore, it will be difficult to presuppose that the access to the demand for the goods and services that are offered can be guaranteed. Moreover, the shifts in competitive advantages will no longer be just the result of technological changes or the effects of public policies. Increasingly, these will hinge on the decisions of a huge number of consumers scattered in diverse markets and, therefore, with multiple options at their fingertips.

In the perspective outlined above, it is worth considering the idea of a convergence between two groups of Latin American countries: those that currently form part of the Mercosur and those of the Pacific Alliance (Group of Eight, or MAP Group).

Such convergence does not necessarily imply that these two integration processes, born from very distinct historical backgrounds and that have used different methodologies, will have to merge. Neither is this perceived as necessary. But it does suppose that some progress is made in the multiple steps that have already been agreed to strengthen the connectivity and the convergence between the respective economic and productive systems, with the ensuing consequences at the level of regional governance.

Argentina, still holding the temporary Presidency of Mercosur and as part of the Troika of the G20, has the opportunity to continue driving the momentum that characterized its term in the Presidency of the G20. The upcoming bilateral meeting between the Presidents of Argentina and Brazil, that will take place next June in Buenos Aires, the Summit of the MAP Group in Lima, in July and, later on, the Mercosur Summit itself, also in July of this year, provide appropriate frameworks to promote actions in the abovementioned areas.

As we have pointed out on other occasions, at least three simultaneous conditions are required for the effective commercial insertion of a country in the world -such as the case of Argentina and many others-, especially in order to obtain the desired results. Such conditions are: a correct diagnosis of the opportunities that the global environment can offer in the short but, above all, in the long term; a realistic assessment of the degree of effective agreement that can be expected in the relations with other countries of the corresponding regional context, and a strategy that is effective in guiding the actions to be developed and that aim to have a reasonable degree of consensus at national level.

The global scenario tends to offer multiple simultaneous options for the insertion of a country in the world. One of the factors contributing to this is related with the growth of the urban middle classes in emerging countries, especially in Asia. This means a significant growth of consumers of middle-class income empowered by the awareness of the multiple options available to them when choosing goods and services adapted to their needs, values, tastes and preferences. Added to this is the effect of the greater degree of connectivity between the different markets, as a result, among other factors, of the shortening of physical distances, the development of digital commerce, and the proliferation of transnational value chains.

Hence the concept of a "multiplex" world, coined by Professor Amitav Acharya (see the August 2017 edition of this Newsletter on http://www.felixpena.com.ar/), becomes quite useful to understand, from the perspective of a developing country, the global context in which competition for world markets, of goods, services and productive investments, is inserted.

This is the reason why in the global scenario that is emerging today, where there is a predominance of actors with multiple options (countries, citizens, companies and consumers), those who aspire to compete can no longer ignore the question on how to adapt their strategy of international insertion to a reality in which competition for world markets will be increasingly dynamic. Therefore, it will be difficult to take for granted the access to the demand for goods and services that can be offered. Moreover, the shifts of competitive advantages will not be hereafter just the result of technological changes or the effects of public policies. Increasingly, they will depend on the decisions of a large number of consumers, scattered in numerous and diverse markets and with multiple options at their fingertips.

In the perspective outlined above, it is worth asking about the idea of a convergence between two groups of Latin American countries. They are the ones that currently form part of the Mercosur and the Pacific Alliance. Together they constitute what may be called the Group of Eight, or the MAP Group.

As in the case of other groups of countries that are relevant to understanding contemporary international relations -such as the "Group of 7" or the "Group of 20"- they are valued for their ability to take initiatives on issues that facilitate international, global or regional governance and have an effective potential to penetrate reality. By acting as a group, that is, jointly and not necessarily with the formal structure of an international organization, they are perceived in their respective spheres of action as relevant actors not to be overlooked by other countries or groups of countries.

The articulation between the member countries of the Mercosur and those of the Pacific Alliance is recognized as one of the top priorities of the Latin American foreign policy of Argentina. It is also true for each of the other countries that form part of these two processes of regional integration.

Such articulation does not necessarily imply the merging of two integration processes that originated from two distinct historical backgrounds and that have used different methodologies so far. Neither is this perceived as necessary. But it does suppose that progress is made in the multiple steps that have already been agreed to strengthen the connectivity and the convergence between the corresponding economic and productive systems, with the ensuing consequences at the level of regional governance. Some steps in this direction were included in the "Action Plan" approved at the Summit meeting in Puerto Vallarta, Mexico, on July 24, 2018 (see http://www.cartillaciudadania.mercosur.int/).

Moreover, these countries are necessary actors in any initiative of joint action that aspires to permeate the Latin American reality, especially for what they represent for the region as a whole, for example, in terms of percentage of population (81%), gross product (86%), exports (89%) and foreign investment flows (81%).

Without these eight countries, an economic integration initiative and its multiple developments could hardly be visualized as having the necessary scope and effective regional impact and, therefore, a reasonable global projection. At the time, all eight countries participated in the creation of the main regional Latin American trade agreements (along with Bolivia, Ecuador and Venezuela), which were, first, the Latin American Free Trade Association (LAFTA), in 1960, and the Latin American Integration Association (LAIA), in 1980. (See our article published in the Foreign Trade Supplement of "La Nación" newspaper on February 14, 2019, on https://www.lanacion.com.ar/).

Without overlooking the difficulties that currently characterize many regional integration processes -among others the European Union itself, as the Brexit crisis has evinced-both the Mercosur and the Pacific Alliance have shown, at the highest political level, that they value the idea of gradually building a convergence around common regional objectives.

It is a convergence that is in the process of development based on the acknowledgement of the existing differences in the methodologies used in each integration process. But it is also being developed by considering, precisely, the multiple benefits that can result by linking, within a shared institutional framework, the strategies of insertion of each country in the international system, in world trade and, especially, in international trade negotiations. It is a cooperation process supported by a shared analysis of the challenges and opportunities posed to the countries of the region as a result of the structural changes observed in global competition.

In this perspective, and as we have also pointed out on other opportunities (see in particular our June 2018 newsletter on http://www.felixpena.com.ar/), the LAIA provides an appropriate institutional framework for the development of agreements that contribute to the convergence, over time, of these two main processes of Latin American integration, in particular due to the provisions on partial scope agreements of Article 9 of the Treaty of Montevideo of 1980 and, especially, of Article 11, which refers to the modality of economic complementation agreements.

That of partial scope agreements was, perhaps, one of the main innovations that were introduced with respect to what was the institutional framework derived from the LAFTA. They are regulated in their many variants in Resolution 2 of the Council of Ministers of August 12, 1980. Based on previous experiences, such as that of the Andean Group, they even open the possibility of sectoral and multisectoral approaches for the gradual construction of spaces of integration among Latin American countries, in a manner compatible with the rules of the multilateral trading system.

The countries of the Pacific Alliance and of the Mercosur have entered into various economic complementation agreements that are, in fact, interconnected and cover a broad spectrum of reciprocal trade liberalization. The idea of formally connecting them within the framework of an economic complementation agreement between the eight countries, with a gradual evolution, would allow further progress in the convergence between both sub-regional integration processes, including an extension negotiated with other members of the LAIA such as, for example, Cuba and Panama, among others. It would allow the development of an institutional architecture favorable to the joint insertion of the countries of the region in global economic competition.

Looking forward, two plans of joint action to be developed by this "MAP Group" can be imagined. The first is that of the issues incorporated in the mentioned "Joint Action Plan", approved at the Summit of Puerto Vallarta. They imply a diversity of actions to be developed at the institutional and regulatory level. The second refers to any joint initiatives that this group of countries can promote in order to influence international affairs that are relevant to their own interests, be they global or regional in scope.

In relation to this second aspect, the convenience of developing joint initiatives by this group of countries in reference to three issues that have great relevance for their agendas of international commercial relations, can be visualized.

A first relevant issue for a joint action of this group of countries is that of the reforms that should be introduced in the WTO. The last G20 Summit gave a clear momentum to this process of reforms. What are or should be the WTO reforms that may be of most interest for the countries of the Mercosur and the Pacific Alliance? What concrete proposals could be presented by this group of countries? And what would be the position of the group in relation to the proposals introduced by other countries or groups of countries such as the US, the EU, China or the Group of 7, among others?

Without overlooking other issues, one that deserves special attention refers to the rules that affect the compatibility of preferential agreements concluded by developing countries with the commitments made in the multilateral trading system. In fact, the interpretations that have prevailed in relation to Article XXIX of the GATT 1994 have generated restrictions that are not necessarily based on what is explicitly prescribed in its text. Among other examples, we can mention the impact that such interpretations have had on the development of the negotiations of the bi-regional agreement between Mercosur and the EU. (On this topic, see the April 2018 edition of this newsletter on http://www.felixpena.com.ar/).

A second relevant issue is the strengthening and full harnessing of the opportunities offered by the LAIA, especially through the instrument of partial scope agreements mentioned above. This is a very practical and functional instrument for the realization of actions between two or more countries aimed at promoting multiple modalities of trans-national productive chains with the objective of having regional scope and global projection.

A third issue is the development of preferential trade agreements of bi-regional scope involving the countries of the Pacific Alliance and the Mercosur. Examples of this may be the bi-regional agreements with the EU and with China, without overlooking other imaginable possibilities.

The conclusion of the bi-regional agreement between the Mercosur and the EU, if materialized, could open the way to the connection with the agreements that the EU has already reached with countries of the Pacific Alliance, as proposed at the time by Ricardo Lagos and Osvaldo Rosales.

This would give birth to a network of bi-regional agreements that would be functional to the promotion of joint investments involving companies from both regions. The same could result from a network of bi-regional agreements between countries of the Group of 8 and China and that were connected to each other.

The connection between the countries of the Pacific Alliance and those of the Mercosur can then reach its full potential if it is developed in the three aspects mentioned above. Hence, Argentina, currently holding the temporary Presidency of Mercosur and still part of the G20 Troika, has an excellent opportunity to continue driving the momentum that characterized its term in the G20 Presidency.

The upcoming bilateral meeting of the Presidents of Argentina and Brazil, to be held in Buenos Aires on June 6 of this year; the Summit of the countries of the MAP Group, that will be take place in Lima, on July 5 and, the Summit of the Mercosur in Santa Fe, on July 16 and 17, provide appropriate frameworks to promote actions in all the aspects mentioned above.

Recommended Reading:

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• Bartesaghi, Ignacio, "Mercosur: un 2018 de continuidad", Informes sobre Integración Económica, N° 7, Marzo 2019, Departamento de Negocios Internacionales e Integración - Facultad de Ciencias Empresariales Universidad Católica de Montevideo. Montevideo 2019, en https://ucu.edu.uy/.
  
• Carciofi, Ricardo, "Inserción internacional de Argentina: el desempeño exportador como límite al crecimiento económico", CIPPEC, Documento de Trabajo nº XX, Abril de 2019.
  
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