The Convergence of the Pacific Alliance and MERCOSUR, and Its Effects on Agricultural Trade: Elements for IICA Cooperation1
Total Page:16
File Type:pdf, Size:1020Kb
The convergence of the Pacific Alliance and MERCOSUR, and its effects on agricultural trade: elements for IICA cooperation1 In response to the convergence between convergence of an important new the countries of the Southern Common development: the announcement that Market (MERCOSUR) and those of MERCOSUR and the European Union the Pacific Alliance, and its effects (EU) have struck a political agreement on agricultural trade, this technical aimed at concluding the negotiations and note, addressed to the ministers of implementing a preferential bi-regional agriculture of the Americas, considers agreement. the contribution that the Inter-American Institute for Cooperation on Agriculture It will be vital to monitor the progress of (IICA) could make through the technical the activities aimed at completing the cooperation it provides to the countries of approval and effective implementation of the region under its Hemispheric Program that agreement, with a view to identifying on International Trade and Regional concrete actions related to trade in Integration. agricultural and agribusiness goods and services that could be promoted with IICA Specifically, this paper focuses on the technical cooperation, in particular for the potential impact on the aforementioned development of the convergence of the 1. Prepared by Félix Peña, member of the advisory group of IICA’s International Trade and Regional Integration Hemispheric Program. 2 Pacific Alliance and MERCOSUR within and then the Latin American Integration the network of bi-regional agreements with Association (ALADI). the European Union. They are also bound to be at the heart of any initiative for joint action aimed at The convergence addressing the situation in Latin America, between the Pacific especially in view of their importance to the region as a whole, accounting as they Alliance and do for 81% of the population, 86% of gross MERCOSUR product, 89% of foreign trade, and 81% of investment flows from overseas. Without Close links between MERCOSUR and these countries, it is hard to imagine the Pacific Alliance are recognized any initiative for economic integration in as being one of the priorities of both Latin America, a region characterized by regional integration groups. This does fragmentation, having an effective impact not necessarily mean the fusion of two at the regional level and, therefore, a integration processes undertaken in reasonable global projection. response to different situations which, at present, use dissimilar methodologies. Hence the interest, within and beyond But it does mean making progress with the region, in the actions aimed at the many steps that have already been intensifying the links between the set of agreed to increase the connectivity countries that make up the Pacific Alliance and convergence of the economic and and MERCOSUR (Grupo MAP). As in production systems of the member the case of other groups of countries countries, with the consequent positive that are important for understanding impact on regional governance. Steps in contemporary international relations (for that direction were included in the “joint example, the Group of 7 and the Group action plan” approved at the Thirteenth of 20), they are recognized for their Presidential Summit of the Pacific ability to take the initiative on issues that Alliance, held in Puerto Vallarta, Mexico, facilitate international, global and regional on 24 July 2018. governance and can have an effective impact on current conditions. In acting The countries currently involved in as a group, they are perceived, in their the two integration efforts have a long respective spheres of action, as important history of working together. It should be stakeholders that must be taken into remembered that they were, together with account. Bolivia, Ecuador and Venezuela, the same countries that in 1960 promoted the Latin Going forward, two areas of joint action American Free Trade Association (ALALC) can be foreseen for the Grupo MAP. The 3 first concerns the issues incorporated are not necessarily based on what is into the aforementioned joint action plan established explicitly in the text. approved at the Puerto Vallarta Summit, which calls for the implementation of A second important issue is the need various institutional and regulatory actions. to strengthen and make full use of the The second refers to joint initiatives that opportunities provided by ALADI, especially this group of countries could promote in through the mechanism of partial scope order to impact issues that are important agreements envisaged in the 1980 Treaty for their respective interests, be they of Montevideo and Resolution No. 2 of the global or regional in scope. They may Council of Ministers. This is a very practical come to think it desirable to undertake and functional instrument that allows two joint initiatives on three issues that are or more member countries to develop especially important for their respective strategies aimed at promoting many international trade relation agendas. different kinds of transnational productive linkages, intended to be regional in scope The first important issue for joint action and have a global projection. by this group of countries is the question of the reforms needed at the World Trade A third issue is the development of bi- Organization (WTO). What are the reforms regional preferential trade agreements of the WTO that could, or should, be of involving Pacific Alliance and MERCOSUR greatest interest to the MERCOSUR and countries. Some examples are the bi- Pacific Alliance countries? What concrete regional agreements with the EU, the proposals could this group of countries United States and China, although others present? What position might the Grupo are perfectly possible. MAP countries take in response to the proposals that other countries or groups of The conclusion of the negotiations of countries, such as the United States, the the bi-regional agreement between EU, China, the Group of 7, etc., may be MERCOSUR and the EU will open the way interested in introducing? One issue that to the connection with the agreements that would warrant special attention are the the EU has signed with the Pacific Alliance standards that affect the harmonization countries, as proposed previously by of the preferential agreements that Ricardo Lagos and Osvaldo Rosales. This developing countries negotiate with the could lead to a very functional network of commitments assumed in the multilateral bi-regional agreements for the promotion trading system. In fact, the predominant of joint investments involving businesses interpretations that have predominated from both regions. The same thing could with regard to Article XXIX of the 1994 result from a network of bi-regional General Agreement on Tariffs and Trade agreements between the Grupo MAP and (GATT) have generated restrictions that other countries. 4 The bi-regional overcome the practical difficulties that could arise in the future and affect the negotiations between necessary balances of the agreement. the EU and MERCOSUR Talent, political will and organizational technology will be required to address The negotiations between MERCOSUR those challenges. and the EU have taken 20 years to complete, while it is 28 years since the What are some of the steps that each political decision was taken to embark MERCOSUR country will have to take for on a journey that was never expected the bi-regional agreement to be concluded to take such a long time. The 28 June and enter in force? Some steps have to announcement of the signing of the bi- be taken simultaneously. Based on what regional political agreement marked the has been observed in other specific cases start of a new phase which, if successful, of agreements of this kind with the EU, will result in the full entry into force of the four main steps will be required, plus other agreement and, even more importantly, possible complementary ones. produce the desired effects in terms of trade and productive investment. The first step will be to disseminate details of the “small print” of the agreement. To be Throughout the years of negotiations with in a position to talk about what exactly has the EU, the idea was endorsed by the been agreed, it will be necessary to read various governments of the MERCOSUR all the texts carefully from the perspective countries. Now they have embarked on of the different sectors involved, both the final phase, which could take another at the national level and in the different two to three years. Then the agreement regions of each country, and in terms will be totally concluded, and its effects felt of the dynamics of trade and future in both regions. investments. Attention will have to be paid to mechanisms that, explicitly or implicitly, This bi-regional agreement will create would make it possible to activate different opportunities and pose challenges. If the types of “escape valves” and others opportunities are tapped correctly, they designed to enable SMEs to make an will translate into investments, trade flows “assisted transition” and modernize their and the creation of jobs. They will also operations for the new expanded market. enhance the image, and ultimately the The EU employed mechanisms of this kind prestige, of both regions, benefitting their to facilitate the incorporation of Eastern policies aimed at further integration into European countries. international trade. The challenges will be related to the capacity of governments, A second step will be for the countries to business and society as a whole to begin to reach the domestic consensus 5 required for their legislatures to approve and the delivery of services, to benefit the agreement. This means explaining its from the network of agreements with the contents in terms of the possible effects EU, taking into account those already on each sector and region of each country agreed upon with the Pacific Alliance and, especially, making it clear what the countries. effects would be if a given MERCOSUR member country were to be unable to secure parliamentary approval.