CONSTRUCTING THE EXPOSITION OF MERCOSUR

International Organization Assignment, December 23rd 2009
CONSTRUCTING THE EXPOSITION OF MERCOSUR
Gracia Paramitha, 070710415

The Emergence of Mercosur
In historical moment, there was a regional relationship and cooperation which located in Latin America, the Mercado Común del Sur (Mercosur). It has been established in in 1991 (The Treaty of Asuncion), initially constitutes one trade bloc that aims to remove commerce interference among its member by establishment tarrif together (Nogueira,2007). It is formed by Argentina, Brazil, Paraguay and Uruguay, has promoted peace and stability, generated a high-level political dialogue and strengthened internal and international cooperation. When the trade agreement was built, it ensures access to each other’s markets on a reciprocal basis. Besides, economic integration permits the development of a framework for cooperation which can become an essential ingredient in the economic development of member countries. Regional integration in the Southern Cone of America has taken place against a backdrop of two processes which are worth recalling here. The first is the revival of regionalism or economic integration (reciprocal and discriminatory trade liberalization) in the early 1990s as an alternative to the multilateral format of trade liberalization (reciprocal and non-discriminatory). The second process is a shift in how all Southern Cone economies have pursued growth, from a model founded on import sub-stitution to one based on opening up their trade. The regional agreement was created as an instrument to facilitate, jointly determine and drive the integration of these economies as the international economy entered a new stage of globalization. The biggest change was witnessed by the Brazilian economy, which opened unilaterally and more fundamentally from the late 1980s and especially in the early 1990s.
Structural speaking, Mercosur is managed by Common Market Council (CMC, Consejo del Mercado Común), which has responsibility about the political decision from integration process. It always makes a regular meeting, twice a year in their members, and only the president could come to this meeting. (Vaillant,2003). The executive council which called Common Market Group (GMC, Grupo Mercado Común) contains of Secretary of State, Economic Minister, Central's Bank president and permanent coordinator from it’s members (Vaillant,2003). It’s also divided into five parlement, such as: The Trade Commission of Mercosur, The Joint Parliamentary Commission. The Economic and Social Consultation Forum, The Administrative Secretariat (Vaillant,2003).

Four Main Approaches to Understand Mercosur
After almost fifteen years of its formal creation by the Asunción Treaty, Mercosur is a term that is used in relation with a regional reality (i), a strategic idea (ii), a formal economic integration process (iii), and an image(iv). (Helio Jaguaribe, 1981) Firstly, as regional reality, Mercosur is multidimensional system which constitutes interactions between political, economic, and cultural level. It expresses itself through perceptions and behaviors of governments, firms and civil society organizations, and through trade and investment flows; as well as a network of interactions involving several aspects of social life. As a great part of South America, Mercosur also a shared history that includes conflicts, rooted deep in history back to the Iberian Peninsula.
Secondly, as a strategic idea, Mercosur implies an option for the logic of integration in the
relationship among its member countries. Indeed, there is a common ground of political stability and democracy within the region, mainly through economic preferences and common policies, with the idea of competing and negotiating together at the global level. At the founding moment of the bilateral economic integration and cooperation program among Argentina and Brazil, in 1986, the strategic idea was closely related to the need to consolidate the “new born” democratic processes, in the field of economic modernization and international trade negotiations. The main strategic ideas nowadays are to enlarge, through economic preferences the national markets and to build a more attractive environment for both domestic and foreign investments. Therefore, it has been reaffirmed by the national identity and challenge of globalization.
Thirdly, as a formal economic integration process, Mercosur has a consensual alliance
among sovereign nations, which its market begin with a customs union. Common principles, criteria and rules of the game (both formal and informal) are conceived as a set of signals sent to citizens, investors and third countries, regarding the desired long term goals of the partners and the road map to achieve them. The quality and efficiency of these instruments and rules will largely depend on the degree of predictability they offer to investors. The rule oriented nature of the integration process is crucial for its success and social legitimacy.
Fourthly, in terms of image, Mercosur is the result of the perception held by citizens, investors, and third countries, in the sense of formal goals, mechanisms and rules of the game. It implies that they could have a real influence in expectations and behaviors of the main protagonists of the economic life at each of the member countries. As long as the image is sustained in the real life, it will certainly be an important element in the concrete behavior of economic and social actors.

The future development of Mercosur
Today, Mercosur faces 3 major challenges: i) improving its decision-making process and its capacity to implement and enforce common legislation, ii) achieving the common market, and iii) increasing the awareness and involvement of its civil societies in the regional integration project. To seize those challenges properly, there are four relevant agendas for the renewal and consolidation of Mercosur as an integration process. The first one is related with its institutional quality, particularly its 10 normative production process and the enforcement of its rules. The second one refers to strengthening the main collective trade disciplines and the development of a gradual coordination of macro-economic policies. The third one is related to the extension of the economic preference among member countries, covering not only trade on goods but also services and government procurement. And finally the last one is related to the need of developing concrete measures of cooperation with the smaller countries, to allow them to take advantage of the enlargement of their markets through an effective access to those of Argentina and Brazil. In the future, Mercosur will concisely increase its pattern of trade, especially compete thoroughly with ASEAN and EU (see the table below).
Pattern of Trade Intra-region ASEAN,Mercosur,and European Union (percentage of total trade)
Regional Organization 1995 2000 2004
Export Import Export Import Export Import
Intra ASEAN 24,6 18,4 22,9 22 23,2 22,3
IntraMercosur 21,2 18,1 21,7 21 15,6 56,6
Intra UE 42,4 42,1 50,9 48,7 51,1 48,8
Sumber : Direction of Trade Statistic-IMF 2005

REFERENCES:
European Commission. Mercosur. 2007. Regional Strategy Paper. 02.08.2007 (E/2007/1640)
Jaguaribe, Helio.1981.“Brasil-Argentina: Relações de conflito e cooperação,” in Revista Brasileira de Política Internacional. pp 93-96
Nogueira,Uziel.2007.UNU-CRIS Working Papers W-2007/7:China-Latin America Relations in The XXI Century:Partners or Rivals?.United Nations University,Comparative Regional Integration Studies.
Pena, Felix. 2005. Understanding Mercosur and its Future. Florida: The Jean Monnet Chair. Vol 5 No 14
Vaillant, Marcel. 2005. Mercosur: Southern Integration Under Construction