Javier Mileithe Argentine libertarian president, made statements about the Mercosur that cast doubt on Argentina’s continuity in the bloc: in an interview with Bloomberg, the president-elect described it as “a customs union that favors privileged businessmen” and that “harms good Argentines”.
This stance led to speculation about a possible departure from Argentina of the block. What would be the consequences if this were to happen?
The scope of Mercosur. He “Southern Common Market”was originally established by Argentina, Brazil, Uruguay and Paraguay. Some time later he joined Venezuelawhich is currently suspended, and Bolivia, which was in the incorporation process, has just been accepted, as indicated by Infobae. Finally I know they associated –a looser way of belonging– Chili, Colombia, Ecuador, Guyana, Suriname and Peru.
He main goal of this regional bloc, according to its official website, is to “promote a common space that generates business and investment opportunities through the competitive integration of national economies to international market”.
To achieve this, members agree to a trade regime that is applied uniformly and negotiate jointly trade agreements with foreign blocks or countries.
In addition to functioning as a joint market, the Mercosur achieved cooperation agreements on human rights, immigration, environment, culture and science, among others. Today, integration reaches social aspects very important.
But along with integration come obligations. This is why the president of Freedom Advances consider it “a nuisance”.
What is in game? After the European Union (EU), Mercosur is the second largest open labor market in the worldfollowed by Australia and New Zealand. These regions are the only ones on the planet with great freedom of labor movement.
This implies that its citizens can work freely in member and associated countries. only with a legal residence, a procedure that, thanks to the agreements, is very easy to do. This is a huge advantage to take into account when deciding whether Argentina leaves the bloc.
Unlike the European Unionthe trade of goods and services in the Mercosur this tariffed. In the South American bloc, import tariffs are mutually agreed upon, being lower compared to those applied to non-member countries. That is to say, Mercosur is actually not a free market.
Furthermore, members of the Mercosur They cannot enter into trade agreements with other countries independently. Are disadvantages or limitations are key to understanding the position of Mileiwho is against state intervention in trade.
The freedom to negotiate bilateral agreements could bring better results for the country’s interests: more appropriate negotiation terms, a direct access to global markets and a diversification of business relationships are some of the advantages that Argentina could take advantage if it decided to make its position more flexible.
However, in an increasingly complex and competitive global scenario, negotiating independently could be very challenging for Argentinaespecially due to the fragility of its economy, which would leave it in a weaker position when it comes to trade.
There is also the possibility of associate, whose advantage would be to maintain the cooperation agreements on social matters – the most important for citizens –, along with the possibility of agreeing on a new trade agreement with the group. But, in that case, Argentina would have a voice, but no vote in the decision-making of the regional bloc.
If you retire, Argentina It would lose many commercial privileges, mainly the priority to sell its products and more beneficial rates when importing or exporting within Mercosur. This, on the other hand, would give it the possibility of negotiating treaties with other countries without the limitations imposed by the Mercosurwhich could boost competitiveness and economic development through new markets.
It must be taken into account that South American economies are, for the most part, competitive and not complementary. That is why Argentina You may want to trade with China, India either USA, for example, instead of trading with Brazil or Uruguay, since most of the products exchanged within the bloc can be produced locally.
ChiliFor example, by being associated, you take advantage of the advantages of belonging to the labor market and free movement of the Mercosurand can also negotiate trade agreements directly with other countries.
From my personal experience, having undertaken USA, I was able to understand the importance of doing business with few obstacles in international markets. Belong to both an important commercial block, such as the Mercosur, as well as signing treaties with other countries or blocks can bring many benefits. Such a boost to the country’s economy would allow it to compete globally, promoting technological development and innovation.
Taking stock, in case Argentina left the Mercosur to allow treaties to be negotiated independently, it would be prudent for it to remain as associated country. That way, you can sign up to agreements you find beneficial, such as those forming the free movement labor bloc, while avoiding current restrictions on trading.
Following the example of Chiliwhich managed to balance its association with the bloc with its participation in the global economy, Argentina could take advantage of the benefits of Mercosur without losing sight of the opportunities in the rest of the world.
Lucas Roitman is a researcher at Stanford and a columnist on international economics.
by Lucas Roitman
