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Abstract
Convergence and confrontation are two different strategic options that
have been evoked with respect to the relation between Mercosur and the
Pacific Alliance. Choosing one or the other transcends the level of the
economic and the commercial and deeply affects the political. Their impact
is closely related with regional governance and the achievement of a climate
of harmony functional to democracy and to the economic and social development
of member countries.
The idea of convergence in diversity has been proposed as central to
the development of a strategy for joint work among the member countries
of both integration processes. The different agreements and measures eventually
adopted by member countries of both schemes could contribute to the goal
of achieving a reasonable degree of regional governance. Showing that
this is possible might be a worthy goal to nourish the agenda of cooperation
between all Latin American countries. Its effects would then transcend
the regional scope.
From the founding moments to a sustainable integration process
Reconciling different and even conflicting interests and views among
nations of the same geographic region has never been an easy task. However,
it is a necessary condition to develop sustainable strategies and policies
for regional economic integration, including joint trade negotiations
with third nations, particularly if they are embodied in agreements and
institutions intended to be permanent.
In a way, the foundation is the easy stage of an integration process
among nations of the same region. For example, in the case of Mercosur
-and this could eventually be the case of the Pacific Alliance- the hardest
part was not necessarily signing the founding agreement in 1991. The initial
moment requires, of course, strategic vision and political skill; but
it also requires luck. Many initiatives succumb or lose vitality in this
first stage which, however, can last several years.
Calling the attention at the international level is a common occurrence
in the founding moments of the integration processes between nations and,
as a result, it generates great expectations. For example, it happened
in 1969 with the signing of the Agreement of Cartagena, which was the
result of a very strong involvement of the then presidents of Chile and
Colombia. In its initial stage and for some years the so-called Andean
Group managed to concentrate much international attention, especially
when it adopted, in December 1970, its foreign investment regime known
as Decision N° 24.
The high expectations that are normally generated by the launch of and
international integration agreement between Latin American countries have
usually led to frustrations, sometimes very difficult to overcome. Something
like this happened over fifty years ago with the launch of the Latin American
Free Trade Association (LAFTA), then replaced in 1980 by the Latin American
Integration Association (LAIA). Different regional integration experiences
-and not only in Latin America- have taught us the difficulty of sustaining
in the long run the reciprocity of interests that support the associative
pact. Sooner or later what could be called the 'curve of disenchantment'
starts to show, often caused by the fact that not all participating countries
continue to view the corresponding agreement as a generator of mutual
gains. At this point is where the loss of effectiveness, efficiency and
legitimacy of the rules originating in the founding agreement begins,
often through a trickle effect (Peña 2014a).
Particularly, changes in the realities at regional level -sometimes as
a result of changes at the global level or even at the national level
of member countries- mean a test for the effectiveness of the mechanisms
for the conciliation of national interests among the members of an integration
process. This may also have an impact on the effectiveness of the common
rules that are agreed. An example of this is what happened in the evolution
of the Andean Group and its main joint body - the Board of the Cartagena
Agreement-, which lost efficacy and even legitimacy after a founding period
with a favorable external context and affinity of values and interests
between the member countries. Then, the decline began with the withdrawal
of Chile and after the transformation into the Andean Community of Nations
(CAN); the original enthusiasm was gradually eroded.
The situation may be more complicated when a founding moment characterized
by the affinity of values and interests -a situation of like-minded countries-
is later followed by periods of significant differences between the partners,
even if temporary. It also becomes more difficult when no effective mechanism
for the conciliation of interests is established to help achieve a dynamic
balance between the different national interests, when these do not necessarily
converge. In this regard, the role of the 'independent facilitator' in
the decision-making process is critical and provides a guarantee for those
participating countries with a smaller endowment of relative power. The
relatively short history of Mercosur shows, at different moments, interesting
examples of this. It is even possible to formulate the hypothesis that
the absence or weakness of effective mechanisms to facilitate the coordination
of national interests has been one of the reasons that would explain the
recurring difficulties that Mercosur has had, and still has, to adapt
to the effects of the dynamics of internal and contextual changes that
have characterized the relations between its member countries -Argentina
and Brazil in particular- since the integration process was launched.
Factors that could contribute to a sustainable integration process
Which are then some of the factors that could help sustain over time
the political will of a group of sovereign nations to work together within
the scope of an integration process intended to be permanent? Without
the concurrence of these factors it seems difficult for a voluntary process
of integration -in the sense of systematic joint work between sovereign
nations- to be sustainable in the long run.
From the different Latin American experiences it seems that three factors
should be considered carefully.
The first one is the ability to adapt the original integration project
to the frequent changes in the political and economic conditions of the
member countries, but also in the external environment, both regional
and global.
Another factor is the density and quality of the economic and, above
all, production networks that are developed as a result of the commitments
made in the framework of the integration process.
And a third factor, strongly linked to the previous one, is the quality
of the ground rules as measured by their effectiveness (ability to penetrate
reality), their efficacy (ability to produce the results that originated
them) and their social legitimacy (ability to take into account, through
the process of rule-making, the social interests of all member countries,
reflecting thus a dynamic picture of perception of mutual gains).
There are at least three relevant aspects that could be important to
facilitate the practice of the difficult art of achieving sustainable
equilibrium points in any institutional agreement among nations of a same
geographic region, especially if they aspire to develop a permanent multidimensional
cooperation process with strong emphasis on trade and productive integration,
such as is the case of Mercosur and now of the Pacific Alliance.
The first aspect is the articulation between the strategies for development
and international integration of a country with the requirements of the
corresponding regional or multilateral agreement. Among many others, an
example in this regard are the trade policies that are needed to be applied
in view of the combination of offensive and defensive interests of the
firms and social sectors of a country and the legal commitments relating,
in particular, to the access to the respective domestic market and trade
protection. In times of global economic crisis with a relative decline
of international trade flows, the natural tendency of every country could
be to protect the jobs of its population. Often this is done covertly
and with such legal subtlety that it becomes difficult for those eventually
affected by the policy of one of the partners to prove that the agreed
rules have been violated. Other times, violations are done overtly and
this affects the international credibility of the country applying the
measures contrary to the agreement, and could eventually have a negative
impact on the effectiveness of the integration process.
The second relevant aspect is the articulation between the different
preferential agreements in which countries can participate, including
the commitments made at the global-multilateral level. In fact, it is
increasingly common for a country to participate simultaneously, or to
aspire to do so, in different regional and preferential trade agreements
concluded, at least formally, within the multilateral framework of the
WTO. This may eventually trigger the need to achieve equilibrium points
between the commitments made in the different agreements and the respective
national interests. Achieving such balance also depends on what are the
concessions and the rules agreed upon in each of the agreements. In particular,
it depends on the actual goals and the political and strategic scope of
each concrete regional preferential agreement.
Finally, the third aspect is the articulation between the requirements
of the short and the long term, both in the national strategies and in
the international commitments taken on by a country. What can be observed
on this respect, at least in recent years, is an effect of growing erosion
of the distinction between short and long term interests resulting, among
other factors, from the close link between trade and productive investment,
which is reflected in the new forms of organizing production at multinational
level. In fact, the fragmentation of production in different modalities
of transnational value chains is generating a great difficulty to distinguish
between the short and long term effects when a country applies restrictive
trade policies. Depending on how they are applied, even when theoretically
such measures would impact only short term trade flows, they may also
have a strong effect on investment decisions in the corresponding country
as a result of the appraisal that is made on the convenience of operating
from its market within the context of a transnational value chain. The
uncertainty regarding trade flows can then affect productive investment
decisions that, while aimed for the long-term, also have a bearing on
the short-term. In the automotive industry, for example, it can lead investors
to prefer those countries within a region that, together with market size
and level of industrial development, provide assurance of the fluidity
of cross-border trade flows.
The relationship between Mercosur and the Pacific Alliance
An issue to monitor closely is that of the relationships that are built
between the two main Latin American preferential spaces: the Pacific Alliance
and Mercosur (Foxley & Meller 2014). It is a matter of economic interest
but also of strong geopolitical connotations. It should be noted that
the relations of several countries of the Pacific Alliance with Mercosur
countries, and particularly with Argentina and Brazil, are very close
at all levels and transcend trade.
Hence, the importance of raising the question of whether these two regional
preferential spaces will complement each other or if, on the contrary,
conflicting views will prevail. It is a question that could take time
to find an answer that is based on solid arguments and not only ideological
or emotional ones. Among other reasons, time could be necessary in order
to have a clearer picture of which are the effective commitments that
are eventually manifested in the space of the Pacific Alliance and to
appreciate the true scope of the present 'metamorphosis' of Mercosur,
resulting especially from changes in its membership, the convenience of
capitalizing on the experience gained since its creation, and its recommendable
adaptation to national, regional and global realities different from those
of the time of its creation (Boletín Techint 2014).
Until now, the Pacific Alliance could be the equivalent of a house to
be built. The willingness to do so exists and the plans are being approved.
But the actual construction will take time, which in turn may be impacted
by the dynamics of change of the external environment. Mercosur is also
the equivalent of a house under construction -the current experience of
the EU shows that this is a constant reality of voluntary integration
processes among sovereign nations (Friedmann 2015; Van Middelaar 2013)-
but it already needs to be expanded and adjusted to the new realities
of its owners and the environment in which they live.
Both constructions are developed within the broader institutional frameworks
that exist in the region. All of them aim to ensure regional governance,
in terms of peace and political stability, and not just in the economic
aspect. These are, in particular, the frameworks of the LAIA and the UNASUR
-and to some extent also that of the CELAC-. Additionally, there are also
regional institutions such as the ECLAC and the CAF-Development Bank of
Latin America that can play a very useful role in facilitating the articulation
between both integration processes (Peña 2014b).
How to get both processes to complement each other, generating a convergence
of development and trade policies and also achieving a growing number
of transnational production networks? This is perhaps the central question
on which to base the future articulation between Mercosur and the Pacific
Alliance from now on, while maximizing the installed capacity within the
scope of the regional institutions mentioned above.
The strategic idea of convergence in diversity
In the above perspective, one can reflect on the latest initiative that
has been raised in terms of Latin American regional integration (Peña
2014b). It comes at a time when the multilateral trading system is still
unable to offer interesting negotiating perspectives, beyond the efforts
at the WTO Ministerial Conference in Bali and, most recently, the launch
of the negotiating process aimed at concluding a plurilateral agreement
on environmental assets.
But even if the outlook of such perspectives became more optimistic,
the initiative that has arisen within the scope of the Pacific Alliance
is opportune, as it can lead to a renewal of the methods for the enhancement
of the regional space in terms of the productive development of each country
and of their insertion in global economic competition.
This initiative was proposed on June 20, 2014, in Punta Mita, Mexico,
where the Ninth Summit of the Pacific Alliance (Chile, Colombia, Peru
and Mexico) took place (Peña 2014c). Among other things, it was
agreed "to hold an informative ministerial meeting on the Pacific
Alliance with countries members of Mercosur." Moreover, "with
the same informative spirit", the Presidents agreed to "conduct
a seminar of academics, businessmen, entrepreneurs and senior officials
of the Pacific Alliance, Mercosur and other countries of the region, including
Central America and the Caribbean."
The initiative of Punta Mita opens a window of opportunity for the discussion
of the strategic idea of "convergence in diversity", presented
by the new government of Chile.
We must keep in mind that convergence and confrontation were, until Punta
Mita, the two main alternatives evoked by the relation between Mercosur
and the Pacific Alliance. It is clear that choosing one or the other transcends
the economic and the commercial and deeply affects the political, as their
impact is closely related with regional governance and the predominance
of a climate of harmony functional to democracy and to the economic and
social development of the member countries.
It is important to have accurate data on the reality of the relations
between the countries of both regional spaces. Hence the relevance of
the publication of the ECLAC report entitled "The Pacific Alliance
and Mercosur. Towards convergence in diversity" (only in Spanish)
(CEPAL 2014), which provides the necessary information for an approach
based on the reality of the relations between Mercosur and the Pacific
Alliance.
The report was specially prepared to be presented at the Seminar on "Dialogue
on Regional Integration: Pacific Alliance and Mercosur", which was
held on November 24, 2014 in Santiago de Chile (Peña 2014d), according
to what was agreed in the Punta Mita Summit. The seminar was held with
the presence of the public and journalism. It was opened by the President
of Chile. In her opening remarks she urged for dialogue and to "dream
out loud". The initial presentation was made by the Chancellor of
Chile. He suggested the main outlines for the strategic idea of convergence
in diversity and the objectives of the dialogue that was to take place
at the Seminar. In this regard, it should be noted that the Ministers
of Foreign Affairs of the member countries of both schemes had had a working
meeting two weeks earlier, in Cartagena de Indias, Colombia, in which
the central theme of the seminar was addressed.
The abovementioned ECLAC report helps verify the density of the network
of agreements and existing relations between the countries from the Alliance
and Mercosur. It is a network that has intensified in recent decades,
especially in some of its connections, such as those in the bilateral
trade between Chile, Peru and Colombia, on the one hand, and Brazil and
Argentina, on the other. For example, the partial agreements signed between
these countries, within the framework of the LAIA, and the relations between
Mercosur and the Andean Community of Nations, have already produced a
complete tariff reduction between Chile and Mercosur countries (100%).
The percentages are also high in the cases of Peru (88%) and Colombia
(90%). Another relevant fact is that in 2013 intra-Mercosur trade represented
14% of the global trade of its member countries, while intra-Alliance
trade represented only 3.5%. In the first case, the percentages are much
more significant if one considers the trade of manufactures. In turn,
exports of the countries of the Alliance to Mercosur are higher than intra-Alliance
(in 2013, intra-Alliance exports were US$19,500 million whereas those
destined to Mercosur totaled US$23,700 million). Chile, Colombia and Mexico
exported more to Mercosur than to the Alliance countries. Additionally,
data on the trade of services and investments -even if incomplete- reveals
the intensity of the relations between the Pacific Alliance and Mercosur
countries, especially with Argentina and Brazil.
As a result of the rich dialogue generated at the Seminar of Santiago
de Chile it became clear that participants value the idea of "convergence
in diversity". They view it as the most appropriate strategy in the
current global economic and political context and as a reflection of how
much has been gained in the relations between its member countries after
more than fifty years of regional integration efforts.
As was pointed out from the beginning of the Seminar, first by President
Bachelet and later by Chancellor Muñoz, convergence does not imply
unifying the two integration schemes nor engaging in tariff negotiations
(without prejudice to strengthening the existing ones within the scope
of the LAIA). It does imply, however, recognizing and respecting the differences
between the objectives and the methods of both schemes, and even between
the trade and development strategies and policies of its member countries.
Various issues were identified as deserving priority action. These were
mentioned by several participants of the Dialogue of Santiago and also
in the ECLAC report. Among others, the main ones were: physical connectivity;
trade facilitation; production linkages and SME participation in them;
student exchanges, including reciprocal internships between companies;
the development of tourism; diagnostic capabilities on global economic
competition; innovation and scientific and technological development,
and monitoring and participation in international trade negotiations,
both at the global multilateral level and at the interregional level.
With regard to the relations with other regions, the need to coordinate
positions on events of importance for Latin America (for example with
China and the EU) was pointed out. In some of these cases the Community
of Latin American and Caribbean States (CELAC) has a central role in coordinating
the positions of the countries of the region. The coordination of positions
in relation to meetings of the G20 and the Conference on Climate Change
(COP21), to be held in Paris in December of 2015, was also mentioned.
In our opinion, the meeting left positive results. The first of these
was to place Mercosur and the Pacific Alliance, each with its own objectives
and methodologies, in the broader context of the strong challenges that
are emerging at the global level and of the opportunities that are opening
up for a region that counts, as one of its main assets, the fact that
it belongs both to the Pacific and to the Atlantic and that has a significant
potential for developing products and services linked with agribusiness,
energy and mining, among others (Lula & Lagos 2014). The second result
was to identify those issues and sectors where it is feasible to have
shared approaches between all or some of the countries of both schemes.
And the third result was to show that the dialogue and the exchange of
views with the participation of representatives from governments, production
and labor sectors and the academia, is the most recommended way to expand
the agenda for the construction of a region in which convergence in diversity
predominates.
Some conclusions
Perhaps the main challenge that was posed as a result of the Santiago
de Chile Seminar is to devise and recognize the need to develop short
agendas and road maps for the priority areas of future joint action between
the members of the different integration schemes. It is a challenge that
involves governments but also business, labor and academic institutions.
On that occasion it was also confirmed that the existing institutional
framework of the region opens a wide range of possibilities in terms of
the areas through which to harness the momentum and pursue the development
of those joint actions identified, as well as of those that are favored
in the future.
If inserted in common institutional and regulatory frameworks, such as
the LAIA at the regional Latin American level, or a renewed and strengthened
WTO at the global multilateral level, this would neutralize the systemic
fragmentation trends observed today.
It is an idea that may be central so that the agreements that are being
negotiated contribute to the goal of achieving reasonable guidelines for
regional and global governance. It involves reconciling the partial scope
approaches with a joint vision that is essential for promoting world trade
in a favorable context for peace and political stability and, at the same
time, for the economic and social development of all countries.
Showing that this is possible might be a worthy goal to nourish the agenda
of cooperation between Latin American countries. Its effects would then
transcend the regional scope. It will require, however, a good dose of
perseverance, technical imagination and political will.
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