Negotiations for a Mercosur-EU agreement: key decisions

The great significance of the negotiations now underway towards the signing of an economic and commercial liberalization agreement between MERCOSUR and the European Union demand that these be widely known and subject to public debate. The levels of confidentiality demanded by European negotiators should be completely eliminated immediately, even though it is defended as "understandable" by the same spokespersons of the local establishment who publicly (or cynically?) criticize the "lack of transparency" or call for "greater democratic control of public management." There is real danger in accepting a closed-book negotiation as a fait accompli that would only later be exposed to public and parliamentary consideration.

It is necessary to recognize that the MERCOSUR-EU negotiation has an enormous strategic importance. This is a question of relationships between societies and economies that involve enormous potentialities for cooperation and complementation. There is no doubt that improving and expanding the relationships between two such important regions must constitute a high priority objective with serious geopolitical considerations.

It should be clear that a free trade agreement (FTA) with conditions such as those that the European Union has established with other Latin American countries -- for example, those recently established with Colombia and Peru -- could be in absolute contradiction with the proposals for independent economic development that have been repeatedly proclaimed by governments and the proud declarations of the principal leaders of the region for having rejected the proposal for a similar agreement -- the FTAA -- in 2005. Even if these be euphemistically called "economic cooperation agreements", many of the conditions and demands involved could be even more severe than those that were sought at that time by the aggressive government of George W. Bush.

Open to trade in exchange for what?

We should point out that the commercial aspects are only one of the factors, and perhaps not the most important, of the negotiations now under way. Even without access to necessary and detailed information, but taking into account the precedent of similar agreements negotiated recently by the European Union, one can assume that the European Union may demand the reciprocal elimination, in the short term, of over 80% of all customs barriers.

It is clear, even though they might offer certain concessions and promises, that the European Union will continue to defend subsidies and protection for their agricultural sector. This alone would deprive the MERCOSUR countries of the power to obtain what could be the most important commercial benefit in exchange for the massive opening up of local markets to open competition with a much more developed economy. This is especially the case with many industrial products. This would repeat, on a greater scale, the scenario of serious commercial imbalances that we now observe in Europe itself, due to the asymmetry between the northern countries with respect to those of the south and the east.

The deceptive affirmation that this is only a commercial negotiation is commonly heard. But this is not the case. The greater part of the themes in discussion are structural in character and involve the whole economy in such critical aspects as services, patents, intellectual property, public procurement, investments and competition. The eventual provision of "most favoured nation" treatment to countries of the European Union, even with exceptional safeguards, would endanger the widely proclaimed objectives of defending and prioritizing the diversification of production models. These require elementary strategies and public policies for development, which have historically been utilized by European countries themselves, through import substitution, priorities for national sourcing, differential credits for the development of regions or sectors currently labouring under unfavourable conditions. The future of our countries could be completely compromised by a bad course of negotiations.

At first glance, the demands of this kind of agreement to inhibit independent, sovereign decisions to introduce legislative, customs, financial or fiscal changes could weaken the elementary capacity of our countries to reorder, weigh, reassign surpluses, prioritize integration on a Latin American scale and reassign differential income from the exploitation of agricultural and livestock, mining and energy resources.

Where are the cost-benefit analyses?

In order to decide what kind of understanding with Europe is possible and convenient for MERCOSUR it is necessary for governments, sectorial entities, social and academic organizations and political parties that claim to defend national and regional interests to not let themselves be steered by superficial statements, but to immediately undertake serious general regional and sectorial analyses concerning the structural impacts both in the short and the long term, as well as to consider possible alternatives.

To begin with, it is necessary to resist ultimatums (such as pressures to negotiate now or never), possible manoeuvres (for example, threats to propose "multiparty" negotiations on an independent basis, as was done with the Andean Community, in order to break the unity of MERCOSUR), or outright distortions of reality (failure to point out that the real economic consequences of the finalization of preferential customs duties on the part of the European Union as of next January 1st, for Argentina, Brazil and Uruguay, would be marginal and could be promptly assimilated).

There are international antecedents that should also be taken into account, involving more balanced options for negotiation with the European Union and other more industrialized countries and regions in order to overcome asymmetries.

Crucial negotiations with the European Union should not be left in the hands of a small group of "specialists" or under pressure from interest groups or superficial media or those media sectors characterized by ideological stances or particular economic interests, as has often happened over the years.

José Antonio Ocampo, who was Minister of the Treasury Department in his country (Colombia) and General Secretary of ECLAC (Economic Commission for Latin America of the United Nations) pointed out recently that "international negotiations should involve a strategic vision, today we are suffering from indigestion of Free Trade Agreements, because we sign them without sufficient study and discussion as to their suitability." This must not happen now. Please, let us learn from experience.
(Translated for Alai by Jordan Bishop)


- Jorge Marchini is a lecturer in Economics at UBA (Argentina), a researcher with the Centro de Investigación y Gestión de la Economía Solidaria (CIGES), and Vice-president of the Foundation for the Integration of Latin America (FILA).

This article is a contribution of the Communication Forum for the Integration of Our America.