MERCOSUR’s future hangs in the balance
Peter Marko Tase is an Honorary Professor of American Diplomatic History and U.S. Foreign Policy at the Azerbaijan University of Languages. He is also the founder of the Azerbaijan–United States Economic and Education Council. The views expressed in this article are his own and may not reflect the position of News.Az.
In 1991, the governments of Argentina, Brazil, Paraguay, and Uruguay established MERCOSUR with the signing of the Treaty of Asunción, making it South America’s largest multilateral agreement aimed at addressing commercial, economic, and political matters across the continent. With the Treaty of Asunción, the four nations agreed to ensure the “free movement of goods, services, and factors of production between countries.”
According to a recent publication by the Council on Foreign Relations (CFR), the four nations reached an agreement to “eliminate customs duties, implement a common external tariff of 35 percent on certain imports from outside the bloc, and adopt a common trade policy toward outside countries and blocs.”
Source: labrujula24
Although Argentina and Brazil sought to strengthen ties and establish deeper regional cooperation in commerce, the economy, and political dialogue, Paraguay’s integration within MERCOSUR has remained limited, reflecting a lack of coherence given the country’s alarming levels of poverty.
Moreover, Asunción has suffered from rampant domestic corruption at the highest levels of government, and its current economic stagnation (slightly above-neutral growth) is the result of political bickering and disagreements between Argentina and Brazil. In the early 1990s, when the two South American giants were eager to promote bilateral dialogue and synchronize their commercial partnership, trade relations among the four countries experienced significant growth.
Source: AP News
Since the beginning of the 21st century, however, MERCOSUR has lost much of its relevance and has largely become a platform for empty rhetoric, where Paraguay has often been discriminated against by the left-leaning governments of Argentina and Brazil. It has become evident that the only landlocked country in the bloc is treated as a junior partner (Spero News, 2012).
The recent implementation and enforcement of external tariffs, applied outside MERCOSUR, on Paraguay’s automotive industry exporting auto parts to Brazil, is a typical example of Brasília’s brash and arrogant attitude toward Paraguayan products crossing the border (ABC Color, 2019).
Despite these political hurdles and geographical disadvantages, the Republic of Paraguay has consistently demonstrated political support, shown a strong sense of responsibility, and complied with all multilateral agreements signed within the MERCOSUR framework. Paraguay’s six-month presidency of MERCOSUR in the first half of 2018 marked an important milestone in the organization’s history, achieving concrete results in ongoing negotiations with the European Union.
Furthermore, Paraguay has provided steadfast political support for MERCOSUR to establish closer cooperation agreements with the governments of the Republic of Korea, the Republic of Singapore, the Republic of China (Taiwan), and the Socialist Republic of Vietnam. This chapter presents a broad range of opportunities and challenges in Paraguay’s foreign policy and highlights the efforts of the current Paraguayan government to further strengthen economic globalization, fostering the international circulation of goods, services, technologies, and capital.
Source: coa
On July 17, 2019, President Mario Abdo Benítez celebrated in Santa Fe, Argentina, the historic agreement signed between MERCOSUR and the European Union. The Paraguayan head of state stated that this strategic alliance would change the course of integration within MERCOSUR and create great opportunities for national development. President Abdo Benítez emphasized that cooperation with the European Union must go beyond commerce and trade partnership, incorporating new models of regional integration to consolidate MERCOSUR as a competitive production platform (PY-MFA, 2019).
The plenary session of the MERCOSUR Summit also discussed ongoing projects in information technology and efforts to reduce the cost of internet connectivity in the region (PY-MFA, 2019).
Before his MERCOSUR counterparts, President Abdo Benítez expressed his satisfaction with the agreement signed between the Southern Common Market and the European Union, describing it as a key pillar for South American integration and development. He underscored the significance of this alliance and the opportunities that European markets represent for the agricultural products of Paraguay and other MERCOSUR member nations.
In his statement, President Abdo Benítez added: “This agreement will change the history of integration for our people in MERCOSUR. It opens opportunities for our products and companies to reach new markets with zero tariffs, in a market of more than 500 million consumers across 28 countries, with a GDP exceeding $34 trillion—a market with a consolidated flow of capital that will create vast opportunities for our people while engaging in the highest standards of global competition” (PY-MFA, 2019)
Source: laciudadrevista
Between 2015 and 2017, Paraguay and the European Union enjoyed moderate trade and investment growth. EU imports from Paraguay increased slightly from €1.006 billion to €1.153 billion, while Paraguay’s imports from the EU rose from €610 million in 2015 to €682 million in 2017 (EC, 2019). In 2017, the European Union was Paraguay’s third most important trading partner (after Brazil and Argentina), accounting for 10 percent of Paraguay’s total trade. That year, EU–Paraguay trade totaled €1.798 billion (EC, 2019).
EU imports from Paraguay were dominated by agricultural products (87.2 percent of total imports from Paraguay in 2017). In the same period, EU exports to Paraguay consisted mainly of manufactured goods—42.9 percent in machinery and transport equipment, and 22.7 percent in chemical products (EC, 2019). The EU is also an important investor in Paraguay: between 2014 and 2016, EU foreign direct investment (FDI) stock in Paraguay increased from €863 million to €1.2 billion (EC, 2019).
On October 21, 2016, Paraguay’s Vice Minister for Regional Economic Integration, Ambassador Rigoberto Gauto Vielman, was interviewed by national media regarding the status of negotiations between MERCOSUR and the European Union. The Paraguayan chief negotiator stressed the importance of reaching agreements on intellectual property, public procurement, and customs and border inspection legislation (PY-MFA, 2019).
Source: perfil
In 2015–2016, Ambassador Gauto engaged in extensive negotiations with his counterparts in Brussels. The Paraguayan delegation addressed a number of issues related to fair trade and the fulfillment of treaties signed under the framework of the World Trade Organization, guaranteeing free trade and open markets, and reaffirming Paraguay’s commitment to fulfilling the requirements necessary to ensure the development and flow of commerce (PY-MFA, 2016).
The Republic of Paraguay, as a dynamic member of MERCOSUR, has vigorously promoted relations between South America’s trade bloc and the European Union, as well as countries of Southeast Asia, including the Association of Southeast Asian Nations (ASEAN). In this regard, Paraguay’s bilateral dialogue with Singapore, Vietnam, and other countries has strengthened Asunción’s commercial and trade ties with that part of the world.
Additionally, Paraguayan bilateral diplomacy has built a trusted partnership between MERCOSUR and Southeast Asia’s “economic tigers,” which have demonstrated global leadership in strengthening trade and development principles in South America. Meanwhile, at a slower pace and with greater bureaucracy, the European Union continues to explore the trade advantages of engaging with MERCOSUR countries.
Over the next decade, the nations of South America will have the opportunity to experience the positive impact of an ever-growing trade partnership with the European Union.
However, contrary to the spirit of partnership outlined above, the government of Paraguay decided in September 2018 to close its embassy in Jerusalem (State of Israel). In 2014, it had also closed its embassy in Jakarta, Indonesia, and continues to maintain frozen relations with one of the most important ASEAN member states.
As the only landlocked country in South America and a founding member of MERCOSUR, the Republic of Paraguay remains determined to defend its national interests and, with Washington’s assistance, pursue practical initiatives in economic diplomacy to ensure that Itapúa’s agricultural commodities and organic food products reach new markets and consumers.
In the same vein, the Paraguayan government must take decisive action toward establishing medium-sized logistics parks in the deep-water ports of Chile and Peru. Both countries could serve as lasting natural gateways connecting Paraguayan agricultural and food industry products with Southeast Asian markets.
The development of an expanded intermodal rail and highway network connecting cargo facilities on the shores of the Paraguay and Paraná Rivers with Chile and Peru (through Argentine territory) would offer a major strategic advantage for Paraguay and all countries involved, including Argentina and Bolivia.
(If you possess specialized knowledge and wish to contribute, please reach out to us at opinions@news.az).
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