MERCOSUR: 30 YEARS ON

Bloc has failed to reach its objectives and change is afoot

The Mercosur trade bloc seems to be facing some hard facts of life and preparing to undergo trade policy changes which will alter the dreams that gave it birth. Sad but, possibly, quite necessary.

Back in the 1980s, the new democracies in the region were being born, offering the promise that — finally — Latin America would have a chance not only to live in freedom, but also to modernize and develop. The world offered new and innovative models of interstate relations but also new tools for modernization and economic growth and development. The European Economic Community, later the European Union, were the living examples. And at the time, there was no shortage of preachers of the new creed wanting to visit this part of the world to share their experience. And there were generous allocations by a number of European Governments and private foundations, who were willing to finance the promotion of the new world.

The Mercosur is the child of those endeavours. Its birth certificate is dated 1985 and it was originally called the the Argentina-Brazil Integration and Economics Cooperation Programme.

There were ambitious plans. The programme also proposed the Gaucho as a currency for regional trade. And there was more. In December 2004, the leaders of the Mercosur created a Parliament. Or at least plans for one, one that would be called Parlasur.

Three elements contributed to the enthusiasm that surrounded the Mercosur.

One was the fact that Latin American unity has been part of the South American dream since the mid-19th century. For many (some would call them “wishful”) thinkers the lack of regional unity was to be blame for weaknesses and problems. So the Mercosur appeared to be a way of galvanizing such unity.

Second, it should be noted that South America, although a relatively peaceful region (definitely more than Europe at least) was not free from tensions that sometimes led to armed conflict. In the case of the Argentine Armed Forces, for many years of the last century there were permanently reviewed “conflict hypotheses” about potential wars with Chile or Brazil, In fact in 1978, Argentina and Chile were on the verge of an open war.

And then there was the dream of economic growth through a common market.

The European mirror returned a most attractive image.

There were some successes. The rhetoric of Latin American unity provided a political base for active political exchanges and the creation of more organizations in which the four original members of the Mercosur (Paraguay, Uruguay, Brazil and Argentina) joined with other Latin American States. UNASUR is a good case in point. It has turned into an organization which can show off some successes in conflict resolution between its members.

But the Mercosur seems to have failed in its original objective of becoming a regional common market.

Some argue that the reason is the asymmetry between the two big partners and the two small ones. Both Paraguay and Uruguay complain frequently about the unfair treatment meted on them by Brazil ad Argentina. In addition, Mercosur seems to have failed to find mechanisms through which business sectors can negotiate past their differences.

Instead Brazilian, as well as the Argentine, business associations focus all their efforts on lobbying and influencing their own governments. And they expect the politicians to take hard-line positions to the negotiating table with the other side. Successes though seem to have been quite less frequent than failures. And this is showing.

There are now strong rumours that Paraguay, Brazil and Uruguay are going to start exploring trade alternatives outside the block. Not too long ago, this was anathema. But effective needs have shortened the patience of both businesspeople and politicians. Unsurprisingly, neither Venezuela nor Argentina are said to be very happy about this. So watch this space for future developments.

@andresfederman

CREDITS: BUENOS AIRES HERALD