First modification: 07/09/2021 – 00:18
The heads of state of Argentina, Brazil, Paraguay and Uruguay held a virtual Summit of Presidents on Thursday in which the differences between the members were evident. While Brazil intends to modernize the bloc, Uruguay seeks to make trade agreements with other countries.
Argentina left the Mercosur presidency this Thursday to transfer power to Brazil. The community bloc, which celebrates 30 years of existence, is made up of these two nations, along with Uruguay and Paraguay.
The presidents that make up the South American trade group held a Summit in which their differences were clearer than agreements.
While Argentina concluded its six-month presidency with a message of union, Uruguay and Brazil supported the idea of starting to sign trade agreements with other countries. But, this position is rejected by the others by not respecting the norms established in the Treaty of Asunción and that prohibit negotiating free trade agreements with other nations individually.
A disputed tariff agreement
Since the Common Market of the South, or Mercosur, was created in 1991, its objective has been to integrate the economies of the countries that make up this mechanism, through the free movement of goods and services, as well as the establishment of a tariff. common external (AEC).
The latter was one of the items on the agenda of this Thursday’s Summit. One of the requests within the bloc is to lower this tariff, considered the highest in the world with an average of 12.5% while the world average is 5.5%. But none of the four partners reached a consensus, and this has been the case for the past two years.
Mercosur members impose the CET on products and services from countries outside the bloc. This tariff serves to protect local production against imports, however, its increase also prevents competition in the regional market.
During Thursday’s summit, Uruguay and Brazil promoted a substantial tariff reduction, while Argentina proposed more moderate and selective cuts that do not affect national companies that do not have the capacity to compete with imported products and services.
Argentine President Alberto Fernández pointed to a reduction in tariffs for the importation of goods for production, but “maintaining current levels of protection for final goods.”
I participated in the Mercosur Heads of State Summit in which we transferred the pro tempore presidency to Brazil.
Argentina has the unalterable commitment, as a member of this regional household, to always respect and promote consensus. pic.twitter.com/qK7qJU8YHB
– Alberto Fernández (@alferdez) July 8, 2021
A weakened consensus figure
When it was the turn of the Brazilian president, Jair Bolsonaro, to speak, the right-wing man told Fernández that the semester ended without achieving the bloc’s “expectations and modernization needs” and criticized that concrete results had not been presented, as he said, in the revision of the CET and the adoption of flexibilities for trade negotiations with external partners.
“The persistence of deadlocks, the use of the consensus rule as an instrument of veto and adherence to archaic and defensive visions will only consolidate a feeling of skepticism and doubt about the real potential of Mercosur,” Bolsonaro said during his speech.
The consensus rule mentioned by the Brazilian is part of the founding agreement of Mercosur: the so-called Treaty of Asunción, which in one of its parts says that the partners of the bloc must jointly negotiate extra-zone trade agreements and marks “the adoption of a commercial policy common in relation to third States or groupings of States ”.
But, for Uruguay, this rule is not in force, which is why it anticipated on Wednesday, during the meeting of Mercosur Foreign and Economy ministers, that it will begin to negotiate with nations outside the South American bloc.
“Uruguay has announced that it will begin talks with third countries to negotiate trade agreements outside Mercosur. The Uruguayan position consists of defending the modernization of the bloc through an agenda of external negotiations, ”the Uruguayan Foreign Ministry said in a statement the day before the Summit on Thursday.
The decision was later confirmed by the Uruguayan president, Luis Lacalle Pou. “The world is becoming intertwined commercially. The end of Covid-19 will cause these negotiations to skyrocket. The world is moving towards there, the world is not going to wait for us, therefore, with a Mercosurian concept, Uruguay is going there and hopefully we will all go together ”, he said.
Currently, Mercosur has seven trade negotiations open, but it has had difficulties in recent years to sign weighty agreements. In addition, the pact reached with the European Union goes through a legal review process.
With EFE, Reuters and local media