The Uruguayan president calls for the autonomy of his country, Brazil has long wanted more economic openness, Paraguay does not explicitly take sides and Argentina defends the traditional model which is thirty years old. Well it turns out that Mercosur was Argentina’s big market and it is advisable not to hurt him too much. Although it requires renovation.

A delicate task of modernization without deletion is under way. It is that something that is hurt now is critical for Argentina: the link with Brazil, which is Argentina’s great partner. For Argentina, it is the largest export destination, although for Brazil our country is the fourth in the world.

For Argentina, the stakes are high: the regional alliance (geopolitics), belonging to a market that if it works well and consolidates, justifies investments by looking at the whole of the bloc and also the market reserve that ” there is in the rest for Argentinian exports of the agreement and in particular in Brazil (Brazil is the fourth foreign investor country in our country and is also at the origin of the investments of multinationals which have already established themselves in Argentina account given the value of access to this destination). The discussion on the future of Mercosur is a requirement.

The Mercosur that no longer existed

This is because the old model no longer produces the results of yesteryear. And apparently, the tendency of most partners is to reform, building on outcomes that require change.

Mercosur is a group that was built to encourage exchanges between its members, but no major incentives to develop cross-border trade with the rest of the world. Here is a current problem. We could call it, like this, like a closed block. The deal has become a bloc with few economic relations outside of itself. That is why Brazil and Uruguay are calling for progress to be made on something that has not been achieved so far; bloc’s agreements with third markets which make it possible to widen the access of exports of companies from our countries to foreign customers under better conditions.

The old Mercosur model no longer produces the results of yesteryear.

Today the bloc has ongoing negotiations with India, Canada, Lebanon, Singapore or South Korea; and the process is pending finalization in accordance with the European Union and EFTA (In addition to defining the relationship between Mercosur and the rest of Latin America). But little has been accomplished in these conversations yet and differences are emerging between Argentina (apparently less interested in it) and Uruguay and Brazil who want more internationality.

Long-term view

There is a new stage in globalization. When the COVID-19-generated pandemic erupted in early 2020, many assumed – and publicly expressed their opinion in this regard – that the world would face a process of overthrowing globalization and neo-nationalism. Well, these days, on average already in 2021, the proof we have is that the world last year went in the opposite direction: the architecture of economic internationality is strengthenedMany milestones in this area have taken place over the past year and the processes of reciprocal economic openness between countries have intensified.

The latest event in this regard is the very recent free trade agreement between the European Union and the United Kingdom, which made Brexit an adaptation to the new hour (and not a break) and that it allowed the two parties to adapt to the differences in models. Shortly before (last November) the gigantic RCEP was signed in Asia, a free trade agreement between 15 countries which together represent 30% of the world product and which generate 28% of the planet’s international trade (it is the most large free trade agreement in the world to date, which includes China, Japan, South Korea, Australia, New Zealand and the countries that currently make up ASEAN).

The world consolidates internationality.

As an apostille, it can be added to the above that during the year 2020 the new trade agreement between United States, Mexico and Canada (ex NAFTA), the United Kingdom concluded its trade agreement with Japan and the Japanese Parliament itself approved the economic agreement with the United States. And that a few months earlier, agreements like AFCFTA had been approved in Africa (the single continental market for goods and services made up of 55 countries). In addition, in our own region, there has not been some progress in this area such as the implementation of the trade agreement between Peru and Australia, the approval by Ecuador of an agreement with the United Kingdom, the conclusion of the pact between Brazil and Chile and the free trade agreement between Colombia and Israel.

The world consolidates internationality. It is to be expected that in our region let’s not back down on this. Even more: that we move towards more external integration. Argentina needs greater international integration as it generates investment, production, jobs, foreign exchange, productive quality and systemic improvements.

A renewed Mercosur must be a tool in this regard.

Marcelo Elizondo is a specialist in economics and international affairs. MBA (Polytechnic University, Madrid), Lawyer (UBA), Professor / researcher at ITBA, Argentine section of ISPI.

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