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As we pointed out in an article in the newspaper "La Razón"
on August 31, 2006, the name Mercosur was a success in terms of the region's
identity (the title of the article is "Does Mercosur have an identity
problem?" and can be found at www.felixpena.com.ar). The acronym
Mercosur was coined by Raúl Ochoa, who was the Undersecretary of
Foreign Trade of the Argentine government at the time of its founding.
We said then that the name helped us identify more than just the organization
itself but mainly a strategic idea that is still valid today. (Raúl
has just passed away, and this recollection is a well-deserved tribute
to his memory and to his career as an expert in international economic
relations and integration issues).
The strategic idea, that is, the creation of the "Southern Common
Market" ("Mercosur"), is embodied in Article 1 of the Treaty
of Asuncion, which together with Article 2 are the key provisions to understand
how the pact of the integration process was agreed upon.
The above is important when discussing issues related to the architecture
of the integration process agreed upon with the creation of Mercosur.
It confirms the idea that when facing a process aimed at joint work among
sovereign nations, there are no rigid models on how to develop it. In
the case of the Treaty of Asunción, at no time were concepts such
as "free trade zone" or "customs union" used to define
the identity of the joint process.
It is also important in order to understand the process that has begun
in other regions to define the architecture of joint work between countries
in terms of international trade relations and economic integration, where
rigid concepts taken from theoretical approaches have also been abandoned.
The signing, on November 18, of the RCEP (Regional Comprehensive Economic
Partnership) between the ten ASEAN countries (Burma, Brunei, Cambodia,
Philippines, Indonesia, Laos, Malaysia, Singapore, Thailand, Vietnam)
and the five countries of the Asia-Pacific region (China, Japan, South
Korea, Australia, New Zealand) is opening a new phase in the geopolitics
and architecture of regional trade alliances.
Although India withdrew from the project before the agreement was signed
and will not be a member, at least for the time being, the RCEP means
a market of 2.3 billion people, with a growing percentage of urban middle
class consumers and 30% of the world's trade and GDP. It was an initiative
of the ASEAN countries and China, and links countries among which different
modalities of preferential trade agreements already exist. Its architecture
does not reflect any pre-existing model, but is in line with the requirements
of the multilateral trading system embodied in the WTO.
The RCEP allows the incorporation of new members. Could they be extra-regional
countries? The Agreement does not prohibit this. In an article published
in Clarin newspaper on November 27, 2020, Xiaoli Zou, the Ambassador of
the People's Republic of China in Argentina, does not exclude it. He points
out that the "RCEP constitutes an open FTA, that is, it admits the
entry of new members. Thus, some analysts argue that extra-regional countries
should take advantage of the opportunity to join the economic circle of
the Asia-Pacific region, which is in line with both the interests of Latin
American countries and the openness purposes of RCEP and the aspirations
of China and other members of this new association"...
Article 20.9 of the Agreement refers to the access of other States in
the following terms:: "This Agreement shall be open for accession
by any State or separate customs territory 18 months after the date of
entry into force of this Agreement". Then it adds the following:
"Such accession shall be subject to the consent of the Parties and
any terms or conditions that may be agreed between the Parties and the
State or separate customs territory". It is not thus specified whether
or not the new member should belong to the region, but most certainly
it does not exclude the possibility. However, it does stipulate that it
must be accepted by all RCEP member countries.
The negotiation of the RCEP began in 2012, when the other major preferential
trade agreement in the Asia-Pacific region, the TPP (Trans-Pacific Partnership),
was still being viewed as a fact, and from which the US withdrew when
Donald Trump took office in 2017. It finally entered into force with modifications
and without the US, on December 30, 2018, with a new name and acronym
(Comprehensive and Progressive Agreement for Transpacific Partnership
- CPTPP). It has eleven members , 495 million consumers and 13% of the
world's GDP (see www.international.gc.ca/trade-commerce).
For background information on the RCEP, its objectives, and the main
commitments made, see, among other sources of information, the official
website of its Secretariat (www.rcepsec.org). For the full text of the
RCEP agreement, published on November 15th, see www.rcepsec.org/legal.text/).
On the RCEP in the perspective of Argentina's foreign trade see, among
other recent publications, the INAI Foundation report prepared by Nelson
Illescas: "RCEP. Some initial considerations after signing",
published on November 18 (www.inai.org.ar) and the article by Gabriela
Origlia, published in the Foreign Trade Supplement of La Nación
newspaper on November 26, entitled "RCEP. With the agreement of fifteen
countries, the largest free trade agreement in the world is born").
On the RCEP itself, see the already mentioned article by Zou Xiaoli, Ambassador
of the People's Republic of China in Argentina, whose reference is included
as recommended reading. For a European view of the RCEP, see Joseph Borrell's
blog, also included as recommended reading at the end of this newsletter.
The RCEP introduces novel elements in the architecture of preferential
trade agreements, which tend to facilitate value chains of regional scope.
In this regard, the application of chapter 3 of the Agreement, referred
to the rules of origin, should be closely monitored, in particular, the
evolution of Article 3.4.1, which refers to the possible modifications
that may be introduced later.
This Article confirms the idea that regional integration processes not
only do not base their architecture on pre-existing models, but also have
the characteristic of being processes in permanent evolution in their
long-term construction.
The RCEP is highlighting the need to further the debate in our region
on how to position the Latin American integration agenda in the context
of the new realities that are emerging in the workings of the international
trading system.
This makes the need to strengthen ALADI's role more current, as we have
stated before, among other times, in our October newsletter, ("The
construction of Latin America as an organized region: a necessary task,
with very long-term objectives and uncertain results", www.felixpena.com.ar).
In addition to the role that LAIA can play in the design and implementation
of a Latin American preferential trade system, especially one focused
on the joint work of the Mercosur countries and those of the Pacific Alliance,
and one that makes it possible to take full advantage of instruments already
provided for in the 1980 Treaty of Montevideo-such as the agreements of
partial scope in their multiple modalities-three other issues will require
much action-oriented thought.
These are,
- The process of revitalizing the WTO as a cornerstone of the architecture
of the multilateral world trading system. (On the issue of redesigning
the architecture of the world trade order, see the recent book by Simon
J. Evenett and Richard Baldwin,and also the recent book by Hals Brand
and Francis J. Gavin, noth included as recommended reading at the end
of this newsletter).
- The completion of the postponed bi-regional agreement between the
EU and Mercosur, with the subsequent developments in order to help link
it with other free trade agreements that the EU has already concluded
with Latin American countries, and especially with those of the Pacific
Alliance (in this regard, see the September 2020 , December 2019 and
September 2019 editions of this newsletter).
- The link that Mercosur has with existing agreements in the large regions
of the global trading system and, in particular, with the regions of
Asia-Pacific, North America, Africa and Eurasia.
These are issues that make the idea of repowering the role that LAIA
can play in the development and harnessing of the architecture of a potential
Latin American common market more current. All of them imply the establishment,
from a geopolitical perspective, of different strategic alliances between
countries that are relevant to international trade.
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