Fernanda Magnotta Mercosur needs modernization and dynamism to survive the

Fernanda Magnotta Mercosur needs modernization and dynamism to survive the 21st century

Over the past week, the Brazilian President’s visits to Argentina and Uruguay have reignited the debate on Mercosur and its role in the process of regional integration and strengthening Brazil’s international leadership. Much ado was made about the possible creation of a “common compensation currency” and again we saw various balances seethe over what this agreement represents for the interests of the country today.

Well then: in 2021 Mercosur will be 30 years old and already in adulthood is still suffering from some birthidentity crises. The project, which formally began in 1991 with the signing of the Asunción Treaty, originally aimed to create a “common market” in South America.

The idea was not only to promote the free movement of goods, services, capital and people and to define a “Common External Tariff” (TEC) for the member countries, but also to propose at some point a coordination of macroeconomic policies.

However, over the years the bloc took on an increasingly commercialist leaning and less focused on macroeconomics. Despite its name, it never effectively became a “Common Market” but a “Customs Union”.

A little over three decades later, it is clear that this regional integration process is bringing benefits. Besides boosting trade between countries per se, Mercosur still provides an opportunity for concertation towards a common multilateral position and paves the way for the realization of broader agendas, such as discussing public and development policies, and technology cooperation and infrastructure.

Even so, the world of 2022 is very different from the one that guided the bloc’s creation in the 1990s, and there are challenges that hamper its strengthening. From an economic point of view, there is an urgent need to find ways to balance the existing asymmetries between countries and the resulting impact on their ability to take on collective obligations.

From a commercial point of view, it is imperative to defend the modernization of Mercosur, starting with the revision of the TEC and the removal of nontariff barriers, as dynamism is vital at this moment. With increasing global competitiveness, there is also a need to engage countries more intensively in production chains and discuss the terms of the bloc’s extraregional relations, especially in the context of an increased Chinese presence on the subcontinent.

From a political and social perspective, there is a need to establish longterm institutional commitments that can be minimally shielded from the effects of polarization and the comings and goings of leadership affecting countries in the region. If, as it has said from the outset, Mercosur really intends to be seen not only as a trading bloc but also as a coordinating mechanism that strengthens the bargaining power of members in other areas of government, it is equally important that there is a commitment to defense some constitutive basic values ​​such as democracy, sustainable development and other socalled “citizens’ agendas”.

The socalled “single currency” is indeed a sensitive issue and deserves a broad and specialized debate. But there are other structural issues that are just as complex and to which we cannot turn a blind eye. Because Mercosur, what do you want to be when you grow up?