Mercosur: Looking to the Past and the Future

In this article, Jose Manuel Quijano takes us back to how the southern common market of Argentina, Brazil, Paraguay and Uruguay (Mercosur) was formed and discusses the main strengths and weaknesses of this political and economic mechanism. There are, he says, two external factors vital to the future of regional integration: the resumption of talks with the European Union (Eu) and the path the relationship of Mercosur member countries with China takes. In the first part of his article, the author analyzes a set of initiatives that raised expectations of a transformation within Mercosur at the turn of the century -- progress toward a customs union, the Trade in Services Protocol, programs for the integration of production, the handling of asymmetries, new institutions and the adhesion of Venezuela as a full member of the community. Many of these proposals have already been or are in the process of being implemented and most of them are judged favorably by Quijano, with the occasional exception. The second part of the essay deals with Mercosur negotiations with the EU, which were reinitiated in 2010 and which have continued in 2011. A good agreement, he says, must necessarily be beneficial to both parties and in the case of Mercosur, those benefits are linked to balanced sectorial growth and the diversification of exports to include not just primary products, but an increasing variety of industrial goods and technology oriented services. An agreement tailored to meet the needs of both parties would not repeat the traditional central-peripheral relationship pattern and, if entered into on an equal footing, could bring Mercosur closer to carving out a niche on the international arena alongside the major actors, thereby reverting current trends that are pigeonholing the country as a supplier of raw materials to industrial hubs. What is suggested here is a "new type of agreement", an ambitious undertaking that seeks a rapprochement between two regions that have historically enjoyed deep-seated ties and that stand to gain from a well-structured treaty that veers away from the traditional free-trade agreement, one in which reciprocity takes pride of place and that tackles "new issues" like intellectual property, government purchases and negative-list services, much like a WTO-plus-type agreement. Quijano concludes by commenting on the strength and international appeal of China, which accounts for a large slice of total Mercosur exports and the vast majority of Braz