Felipe Solá | Three decades of a robust Southern Common Market

This year, the Southern Common Market (MERCOSUR) celebrates its 30th anniversary since its founding with the signing of the Treaty of Asuncion in 1991. MERCOSUR is a historic achievement of the countries that comprise it (Argentina, Brazil, Paraguay and Uruguay), which has allowed us to move from a logic of rivalry to one of cooperation.

The regional integration in Latin America has a long tradition, in which we could mention the theoretical work of Raúl Prebisch as early as in the 1950s, or the founding in 1960 of the Latin American Free Trade Association (LAFTA). Later, in 1980, the current Latin American Integration Association (ALADI) was created and, in the middle of that decade, the rapprochement between Argentina and Brazil began (Iguazú Act of 1985). These two countries were later joined by Paraguay and Uruguay, culminating in the creation of MERCOSUR in 1991.

The bloc was born in a climate of return to democracy in Latin America and from that time our countries acknowledged it, as a central tool for regional cooperation to leave behind, the danger of dictatorships and de facto governments. Our governments understood that the elimination of barriers in our region would be important to improve our economic well-being and also to eliminate the hypotheses of conflict that previously existed between some nations through a broad process of building mutual trust. Precisely, the logic behind the conflict hypotheses that previously existed in the region is belief that the only way to gain something is to take it from someone else. This logic has been replaced by that of building common interests on the basis of common needs.

It was believed that relations between countries were a zero-sum game. Faced with this way of thinking, our democratic governments proposed a model of mutual benefit in which trade generated profits for all countries through market expansion and economies of scale and specialisation, making our productive systems more competitive and benefiting all parties. It was understood that the same could be done in political, social, cultural and educational areas. It is a model of cooperation as opposed to one of conflict.

Cooperation within MERCOSUR has extended to many areas: culture, education, science and technology, the trust achieved in defence and nuclear energy development (a fundamental aspect in the 1980s), the composition of a common citizenship, coordination of social and economic policies, etc. In the bloc, the areas of joint work are many and varied and they are being modified as changes in the international context and of our countries so require them.

FREE TRADE ZONE

Beginning in 1991, we created a free trade zone for our goods and services to circulate without restrictions, as well as a common external tariff to manage trade with the rest of the world. This allowed our mutual trade to grow vigorously. We also managed to promote an exchange of value-added products among our partners, which allowed us to boost non-traditional export activities that create quality jobs (biofuels, chemicals and petrochemicals, plastics, pharmaceuticals, iron and steel, automotive, among others). Indeed, while MERCOSUR countries are traditionally strong exporters of primary products, many of the exports between the bloc’s members are industrialised products, especially in the automotive trade (almost 50% of trade between Argentina and Brazil).

In parallel, we are working to harmonise technical regulations so that they provide safety for production and consumers, without unnecessarily obstructing trade. In the area of public health, coordination between our countries has always been important, and even more so during the current COVID-19 pandemic. Our citizens can also reside in another country of the bloc and work freely without constraints, something that is not common in the rest of the world.

In 2004, we created the MERCOSUR Structural Convergence Fund, which to date has overturned more than US$1 billion in non-reimbursable loans for infrastructure and productive development projects, among others, enabling us to increase the competitiveness of our economies and improve our living conditions, especially in the most underdeveloped areas of our countries.

On the other hand, since its early years, MERCOSUR has sought trade agreements with all the countries of the region, which has allowed it to build a free trade area with most countries of Latin America. We have also negotiated trade agreements with the European Union (EU), the European Free Trade Association (EFTA), Israel, Egypt, and India, the countries of southern Africa, among others. MERCOSUR is not a bloc closed to foreign trade, but a platform for our countries to project themselves to the rest of the world.

SO MUCH TO BE DONE

As is always the case, not all the expectations generated by the creation of the bloc have been fulfilled. In this sense, although industrial and high value-added trade is important among the partners, there is still much to be done in terms of active industrial policies. The initial expectation that the expanded market alone would boost trade in our industries was not correct. Faced with this reality, the bloc has had difficulty in developing joint policies to develop competitive advantages that would serve to distribute the advantages of regional integration equitably among partners.

We believe that the meaning of integration is to seek agreements, respecting the diversity of our countries. Even when we think differently on certain issues, our ultimate priority is the will to integrate, our common agenda. Our countries promote regional solidarity in political, economic and social issues because we know that facing difficulties together would make us stronger.

For our countries MERCOSUR is the most relevant foreign policy instrument in the last 30 years. It is, in short, a state policy that has been preserved beyond changes of government. In these 30 years, we have achieved many commonalities: commitment to democracy as a fundamental condition for the life of our peoples; respect for human rights as an essential and inalienable value for coexistence; recognition of our diversity; coordination of our growth policies to integrate our productive structures. This is a job that we must continue to carry out day by day, so that in 30 years’ time we can look back, as we are doing now, and feel proud of what we have built.

The world is experiencing a reconfiguration of the global power structure, together with a crisis of the international institutions that have governed us over the last 70 years. In the face of the challenges and uncertainties posed by this scenario, we have no doubt that the integration of our countries will continue to be the best way to boost our development, preserve our sovereignty and promote the well-being of our peoples. Power is weak unless it remains united.

Felipe Solá is minister of foreign affairs and worship of Argentina. Send feedback to columns@gleanerjm.com