Jeremy Paxton – Global Issues 4783

 

 

Overview: With the creation of Mercosur, the economies of the four principle members have grown dramatically, exceeding many expectations. However, recent economic problems, organizational issues and stagnation have raised the question of the future of Mercosur.

 

Historical Notables:

  1. Early 1980’s- Malvinas War
  2. 1985- Iguacu Declaration: Security (Nuclear)
  3. Early 1990’s- End of The Cold War
  4. 1991- Asuncion Treaty : Created MERCOSUR (Economic)
    1. Brazil, Argentina, Uruguay, Paraguay
    2. Subsequent years invitations, as associate members, extended to Andean Pact group (Bolivia, Ecuador and Columbia), Peru and Chile. Venezuela to be a full member “by next December.”
  5. 1994- Ouro Preto: Consolidation of former treaties

 

Purpose/ Objectives:

The creation of Mercosur was primarily for economic reasons. These countries had a fear of being “left behind” in the economic world. Two other major reasons were for political stability (recent “rebirth” of democracy) and regional security. Mercosur exists for “the development of a common market, as it is defined in the Treaty, and built upon the reciprocity of rights and duties among partners.”

 

Structure:

Mercosur is made up of an intergovernmental Council of ministers and high-level officials, a Joint Parliamentary Commission, and a Social and Economic Forum (for the participation of the non-governmental actors). Political institutions of Mercosur include COREPER (a committee to support members’ initiatives towards 3rd countries), a dispute-resolution tribunal, Mercosur Forum of Federative States and Cities, and a 2006 establishment of a parliament for Mercosur. Notably- “a proposal for the creation of structural funds and rules for regional governmental purchase have been approved.” (See also page 55 CRI Figure 3.1.)

 

Keyword: Intergovernmentalism- Like a lot of the integration systems looked at, Mercosur has issues with creating supra-national organizations (whether supra-national are good are not is another question). They have troubles with letting other’s “managing” their affairs. Possibly a result from colonization.

 

Key Themes:

Guedes- Argues some important differences between the EU and Mercosur namely, 1) The origins of the creation of each integration model are completely different and regional specific; 2) Therefore, because of these differences there must be organizational institutions that recognize and exemplify these differences; and introduces us to the Mercosur “versions” of deepening and widening.

- Deepening: “creating an infra-structure of communication, transport and energy to enhance links among South American countries, and attracting the non-Mercosur members to join-in a common integration and regional development process.”

- Widening: “establishing as much as possible free trade agreements and common strategies with countries and blocs of countries all over the globe.”

Guedes’ conclusions infer a positive outlook for Mercosur. It has laid the “framework” and Guedes reminds us that the EU was confronted with hard times, even to exceed those being perceived for Mercosur now.

Pena- Introduces “four main approaches to understand Mercosur”, 1) regional reality; 2) strategic idea; 3) formal economic integration process; and 4) image. Pena explains his interpretation to each of these “approaches” and then compares the achievements of each to their respective failures.

  1. Regional reality- a passing from a lower level of interdependence to a higher level vs. “the contagion effect.”
  2. Strategic Idea- “greater continuity and consistency in the political leadership over the last twenty years” vs. the growing lack of commitment of the political leadership.
  3. Formal economic integration process- rapid advancement of 1991-1994 vs. inefficiency and a lack of progress in macro economic coordination.
  4. Image- the perception of public opinion, investors and third countries of inception in 1991 vs. the perception of public opinion, investors and third countries of now.

Pena also questions the efficiency, credibility and social legitimacy of Mercosur and draws some conclusions to it… in somewhat contrast to those of Guedes. Pena’s perception seems to be more of a “if Mercosur doesn’t change its evil ways now… they are doomed!”

 

Crises:

  1. 1995 Tequila Crisis
  2. 1999 Devaluation of the Brazilian Real
  3. 2002-2003 Argentine Economic Crisis and restructuring

 

Criticisms/Challenges:

  • Institutional Structure
  • Dispute-resolution mechanism
  • Regional hegemony of Brazil
  • Supra-nationalism vs. Intergovernmentalism
  • Lack of commitment
  • Economic crises
  • Inefficiency
  • Poor image

 

Positives:

The economic conditions of each country at the founding of Mercosur (pg. 62 CRI tables 3.3 and more importantly 3.4) compared with subsequent years, the political health of the region, namely democracy, and the overcoming of the fore mentioned crises and the “first results of 2003-04 of Argentina’s and Brazil’s move toward an export oriented model”.