Mercosur: A New Victim of the Coronavirus?

[Ricardo Arredondo is a Professor of International Law and Diplomacy (UBA-UP-UB).]

As a consequence of the “coronavirus disease pandemic of 2019 (COVID-19)” (hereinafter “coronavirus”), the international community is facing a transcendental crisis that is likely to generate significant change in the international order as we know it. The pandemic has come to clearly and unquestionably remind us of the vulnerability of people and the planet to global threats.

This crisis has contributed to accelerating the weaknesses of multilateralism and of a rules-based international order. This is not a situation caused by the coronavirus, but something that had been brewing for many years and that the pandemic has precipitated.

The response to the pandemic has been varied, from states that have retracted into themselves, seeking individual solutions (e.g. the United States and Turkey, to name just a couple) to others that have shown solidarity and offered cooperation (e.g. China and its “mask diplomacy”).

In Latin America, the governments of the region have adopted different solutions to a deeper and longer crisis than originally predicted. A look towards the neighborhood shows that Mercosur has adopted certain formal measures, such as the Declaration of the Presidents of the Member States of MERCOSUR of March 18, which instructed the MERCOSUR bodies to continue working and advancing in the integration agenda and to coordinate and overcome trade and transport obstacles among the Members, and the initiative to combat the coronavirus, which approved a reserve fund of US $ 10 million to combat the pandemic. Likewise, at the meeting of the Mercosur Coordinators, on April 20, the impact of health and commercial policies in the context of COVID-19 was evaluated and it was agreed to set up a legal framework to videoconferences to streamline the operation of the organization.

However, as the former Argentine ambassador to Brazil, Juan Pablo Lohlé, pointed out, the ideological and positional rivalry against the coronavirus has prevented substantial coordination between Argentina and Brazil. This lack of affinity between the governments of the region generated a “deficit of bonds in an emergency moment”, which must be overcome.

On April 24, at a meeting of National Coordinators of Mercosur on external relations, the Argentine representative, Jorge Neme, communicated the decision of the national government to suspend the participation of the Argentine Republic in the different processes of external relations that Mercosur is negotiating. With the express exception of the agreements already signed, although still pending parliamentary approval and entry into force, with the European Union (EU) and with the European Free Trade Association (EFTA), which comprises Switzerland, Norway, Liechtenstein and Iceland; Argentina expressed its decision not to continue participating in the negotiating processes in progress with South Korea, Singapore, Lebanon, Canada and India, among others.

The decision was the subject of various criticisms, although in my opinion it is correctly based since the conclusion of the agreements that are being negotiated is inevitably going to lead to unfavorable results for the country. As the Brazilian Foreign Minister acknowledged, this Argentine position had been already anticipated to the other Mercosur Member States. Therefore, it did not come as surprise. On the other hand, Argentina entered these external trade negotiation processes without having carried out an adequate study of the possible advantages and damages that could occur for the country and without having carried out a process of internal consultations with the different sectors involved. Thus, the purpose of this decision is to effectively make an “intelligent insertion” in the world, with a prior evaluation of the damages and benefits of Argentina’s interactions.

Emanuel Porcelli rightly points out that since mid-2019, some countries (particularly Brazil) have been pressing for two objectives: an acceleration of external trade negotiations, especially the conclusion of certain free trade agreements, and a reduction, as low as possible ( with claims close to 0%) of the common external tariff of Mercosur. Continuing with this process, added to the current difficult economic situation in Argentina, would have translated into a dangerous recipe to attempt some type of recovery of the national industry.

This decision does not mean in any way that Argentina is going to adopt a policy of isolation or confinement. As the press release says, Mercosur is “much more than geography and history”. Argentina has reaffirmed its belonging to this common geographic and strategic project and its willingness to continue working with its partners. Argentina will continue to interact, work and trade with the rest of the world as it has been doing it so far. The ratification of the commitments already signed with the EU and EFTA are clear evidence that Argentina is not proposing the breakdown of Mercosur.

The communiqué issued by the pro-tempore presidency of Mercosur, in the hands of Paraguay, affirms that “The Argentine Republic … indicated that it will not be an obstacle for the other Member States to continue with the various negotiating processes”. This statement is not included in the communiqué issued by the Argentine Ministry of Foreign Affairs. In this regard, it should be remembered that CMC Decision 32/00, which lays the foundations for Mercosur’s external relations, compels its Member States to jointly negotiate agreements with third parties (art. 2). Therefore, until as long as this norm is not modified, the Argentine Republic maintains a blocking capacity with respect to these external treaties. And here the challenge is to find a middle way between letting partners move freely towards unrestricted openness or hampering those negotiations. At this point, there is clearly not only an ideological division but also one of perception and vision regarding what the future should be, but in my opinion, Argentina shouldn’t leave these processes completely because that decision would probably not benefit Argentina.

The impact and consequences of this crisis are multifaceted and, in particular, the effects of COVID-19 will generate the largest recession that the region has suffered since 1914 and 1930. A sharp increase in unemployment is expected with negative effects on poverty and inequality. It is enough to read the reports of the IMF, the WTO and ECLAC, among others, to perceive the complexity of the scenario that lies ahead of us. None of the reports predicts a favorable situation. The outlook seems quite volatile and, at this time, a wait and see policy is advisable. In the midst of this uncertainty, it does not seem reasonable to move forward in a process of trade negotiations.