Mercosur still has two types of imbalances: structural (territory, population, infrastructures…) inbalances and public policy (fiscal matters, investment promotion exports) ones. The author believes that responding to these imbalances means implementing a genuine strategy for regional solidarity, which is not derived from dispersing charity among the poor but instead from the pragmatic necessity of greater benefits.
In view of this problem, dealing with the imbalances involves the construction of a genuine regional solidarity strategy, which does not involve charity but a pragmatic need. “The richest countries on the regional level are not the wealthiest ones worldwide” Despite the best intentions, this is a difficult obstacle to get rid of 16 years after the creation of the Mercosur bloc.
If we simplify, we can distinguish two types of imbalances: structural ones (related to territorial size, the size of the economies, wealth, infrastructure, etc.) and public policy ones (those related to fiscal incentives, programs promoting investments and exports, and preferential financing, monetary policy, etc.).
SALVATION FOR THE POOR
Directing our attention to the structural imbalances, we can see that
Even if it is true that these differences in market size provide unquestionable advantages to Brazil and Argentina in the integration process, we must also highlight that, unlike the European Union (where there is a correlation between size and wealth of the member countries, which has largely facilitated the implementation of cohesion policies) there is no such concordance in Mercosur’s case. If we observe the well-being statistics in the regional bloc, such as per capita consumption or the Human Development Index, it becomes evident that economic size does not have any correlation whatsoever with the wealth of each of the member states. Even though
“Structural differences exist not only among the countries, but also at an internal or sub-national level” This attempts to highlight the fact that the wealthiest countries on the regional level are not the wealthiest countries worldwide. In fact, Mercosur encompasses countries of low to middle income level, and as there is no correlation between size and wealth, or any national and regional disparities, this creates serious difficulty when it comes to devising policies to correct these imbalances. In this sense, a red light flashes when
Furthermore, structural differences exist not only among the countries, but also at an internal or sub-national level. For example, the per capita Index of Production of the wealthiest region (Patagonia) is almost five times greater than that of the poorest region (northeastern
THE ROUTE TO CORRECT THE IMBALANCES, A PRIORITY
The need to adopt policies to correct the imbalances does not come from any ethical or altruistic reason (as INTAL  points out), but instead from the simple need to guarantee the partners that the benefits are greater than the costs. “It is interesting to point out that during the beginning of Mercosur’s creation, Uruguay and Paraguay did not insist on the inclusion of a special and differential treatment principle because they were afraid of being left out of the bilateral agreement between Argentina and Brazil” We are dealing with a merely pragmatic necessity and the consequences of not acting on the matter can come to fruition in the middle to long run, in view of the growing discontent between Paraguay and Uruguay. The eastern country’s insistence in their intention to sign a Free Trade Act with the
Up until now, what has been done to correct the imbalances? Dealing with them has not always been a priority on the bloc’s agenda, and the topic’s political evolution has been in total synchrony with the dominant economic paradigms in the multilateral trade negotiation rounds.
During the new wave of Latin American integration, from the end of the 1980s and the beginning of the 1990s, dealing with the imbalances did not play a predominant role under the principal argument that the great benefit of the broadened market was much bigger for smaller countries than for larger ones. The broadening of the market itself was considered to be a principal instrument for development, in line with the conceptions of the Uruguay Rounds of the GATT .
Coupled with this interpretation, it is also interesting to point out that during the beginning of Mercosur’s creation,
Ever since 2003, there has been a change in the conception of the treatment of the imbalances in Mercosur that coincides with the change seen in the Doha Rounds (2001), in which the concepts of a special and differential deal and unbalanced reciprocity were taken up once again. As a turning point towards that direction, measures that were sensitive to the smaller advantages of
Undoubtedly, the most significant measure was Decision 03/27, which promoted the execution of studies for the creation of Structural Funds in Mercosur, finally captured in the Focem (Funds for Mercosur’s Structural Convergence), and currently in motion. If FOCEM is a late first step towards either overcoming the imbalances or a political compensation in view of the discontent of the lesser partners (or maybe both), it is a question that deserves a separate analysis.
A CHALLENGE FOR CRISTINA
“We are dealing with a pragmatic for a true social and productive Mercosur in which the lesser partners have incentives to remain within the bloc” At the last summit of Mercosur’s Heads of State, held in December 2007 in Asunción, the launch of a Strategic Plan to Overcome the Imbalances was passed over. The plan had been proposed by
Even though all of this might be a very ambitious endeavor, policymakers should not lose sight of two essential points that I will point out. In the first place, we are dealing with a pragmatic necessity that is more than beneficial for a true social and productive Mercosur in which the lesser partners have incentives to remain within the bloc.
Secondly, all strategy in the said direction should be conscious of its great limit: the condition of being developing countries that all members share, and the difficulty that this represents when it is time for the larger countries to help the smaller ones.