Alberto Fernández seeks a way to rebuild the relationship with the Mercosur partners so as not to be isolated in the region

At the end of the Mercosur Presidents’ Summit last Thursday, a sense of relief gripped the Argentine head of state, Alberto Fernández, and his entourage in charge of diplomatic tasks. Given previous tensions and Uruguay’s announcement of its willingness to negotiate outside the bloc, they assumed the worst of ends. The conciliatory tone they heard from Luis Lacalle Pou and Jair Bolsonaro left them calmer and at the same time faced with a gigantic challenge: how to immediately rebuild the relationship with the two trading partners so that Mercosur remains standing.

Argentina depends on this reconstruction not to be “isolated” in the region. Primarily, the rapprochement should take place with Brazil and Uruguay, which are full members seeking radical changes to keep Mercosur functioning. The two countries, with different arguments and also some coincidences, argue that the bloc must modernize and adapt to the changes that world trade has witnessed in recent years. Mercosur has, for Lacalle Pou and also for Bolsonaro, archaic rules that must be reformulated.

Uruguay intends to break a fundamental rule of the common market born 30 years ago with the Treaty of Asunción. He wants to “make it more flexible”, that is to say allow each country to negotiate with third countries without the authorization or the consensus of its partners in the bloc. For example, if Uruguay wanted to establish an import contract for electronics products with a Southeast Asian country, it could do so. This collective bargaining strategy was put in place so that imported products do not affect local production.

“Flexibility, different speeds, let’s see the name, but Uruguay must move forward. We will formally propose that the question of relaxation be discussed. Uruguay needs Mercosur technically and politically to make a decision in this regard. There is no time for major dialogues and committees, it is time to act, ”proposed Lacalle Pou at the previous meeting of presidents on March 26, when three decades had passed since the creation of Mercosur.

For Uruguayans, international trade in their produce, mainly agro-livestock, is increasingly complex. Within Mercosur, he cannot sell most of his products. And in this context, its dependence on imports from China has increased, which has become its main buyer. This aspect obliges it to promote the opening of new markets.

“The world goes very fast, it intertwines commercially. The end of COVID-19 will cause these negotiations to skyrocket. The world is going and they won’t wait for us. Therefore, calmly, We want to tell you that Uruguay is going. I hope we all go together», Declared the Uruguayan president, noting that his country had taken the decision to negotiate unilaterally but leaving the door open to continue to speak about such a sensitive issue.

Brazil follows the Uruguayan position and also wants the common external tariff (CET) to be drastically reduced to gain in competitiveness. On average, this tariff in the block is 13% (the tax that each commodity pays when it enters Mercosur through one of its States Parties) and Bolsonaro, with its Minister of the Economy, Paulo Guedes, and supported by Uruguay, wants to lower it. at 6 or 7%. Overall, on average, the tariff is around 5.5%.

Argentina proposed a few months ago that this reduction in the CET be done gradually: a decrease of 10% now and another for 2022. But this was not accepted. “Argentina has chosen not to affect the finished products, preserving the competitiveness of our industrial sector so as not to affect the most sensitive sectors.. We believe that progress can be made in this framework, ”explained the Secretary of International Relations of the Argentine Foreign Ministry, Jorge Neme, on June 10, before the meeting of foreign ministers of the bloc was suspended.

Argentina’s hope rests on the fact that this time, although Bolsonaro was inclined to accompany Montevideo’s position, criticizing the use of the rule of consensus as an instrument of veto and reaffirming that he would maintain his “efforts “For” the revision of the common external tariff and flexibility for trade negotiations “, his speech touched on moderation.

“We have to deal with the flexibility of negotiations with foreign countries ”, the Brazilian president said during the virtual meeting on Thursday. And added that you want your “Integration partners” support you in the ideals of “openness, democracy and freedom”.

Alberto Fernández and Foreign Minister Felipe Solá understand that Bolsonaro is always ready to build bridges so that Mercosur continues to exist. In Brazil, the industrialists of São Paulo, mainly, but also members of other chambers of commerce are pushing to comply with Argentina’s intentions of a gradual reduction of the CET.

“We believe that it is through more regional integration and not less regional integration that we will be better able to negotiate and produce”, Alberto Fernández had previously mentioned, although he did not specifically mention the announcement by the government of Luis Lacalle Pou that the day before the summit communicated its intention to negotiate unilaterally, he developed: “Argentina once again reaffirms that ‘no one is saved alone’ and that a Mercosur at the heart of solidarity is the flagship of its integration strategy.”

Paraguay, the other member of the common market, still votes in agreement with Brazil. “Any proposal that speaks of leaving Mercosur is for us an inappropriate proposal.Foreign Minister Euclídes Acevedo said in a recent interview after learning of Uruguay’s determination. This is a positive signal for Alberto Fernández who maintains cordial relations with the president of the neighboring country, Mario Abdo Benítez.

With Paraguay almost on the same wavelength, Argentina’s objective will then be to work to reestablish ties with Brazil, which will occupy the presidency pro tempore until December and will try to impose its own agenda, and with Uruguay. They do not want Argentinian isolation in Mercosur or that it disappear altogether. Will it be possible? Only time will give an answer.

KEEP READING: