On May 2nd, the op-ed section of the Argentine newspaper Clarín featured an original foreign policy account that is worth reviewing. While the text reiterates some mantras associated with the desirable future of South America's insertion into the world, it is disturbing to observe that some sectors of politics and our civil society insist on calling a Free Trade Agreement (FTA) something that to date is only a battered and incomplete project currently under revision.
In various articles published in the same section, and in at least half a dozen specialised media and forums, I argued that it would be difficult to sign a satisfactory FTA with the European Union, the negotiation of which I undertook to initiate with the compulsive enthusiasm of a novice. Some of those observations were updated in a column in the Monthly Economic Report of the Universidad del Salvador that was circulated on April 20th, 2023 under the title "Magic Realism and the Chronic Scarcity of Foreign Currency". The constant back and forth of confusing and ill-founded narratives does not help to understand where we stand.
At the end of June 2019, former Ministers Jorge Marcelo Faurié and Dante Sica together with Cecilia Malsmström undersigned the draft of a bi-regional Free Trade Agreement (FTA) between Mercosur and the European Union (EU). Such drafts are usually just that: documents without legal standing until the procedural requirements have been fully complied with. From this point of view, it is not correct to state that a consensual text exists for a Free Trade Agreement (an FTA), when its provisions have not yet been fully negotiated and accepted.
After the phase that ended in June 2019, the first requirement to be met was to subject its content to "legal scrubbing". Those familiar with the process know that such scrubbing can alter the original intent of the negotiated agreement, which in turn could hinder rapid and credible progress.
It is unclear whether Mercosur really knew what the content of the draft agreement was worth and what its governments had committed themselves to, something that requires a technically demanding professional and political debate that as yet does not appear to have materialised. The London School of Economics, which is the European Parliament's ad hoc consultant, said in plain language that the content of the draft did not represent a significant breakthrough; in other words, it did not produce rules and commitments that could be considered a "game changer". Similar comments have been made by the last three EU Trade Commissioners in different language and with undiplomatic terms.
Before this second step was taken, that is to say the legal revision and approval of the new content to be submitted for the mandatory signature of the executive authorities of both regions, Angela Merkel, who was then Chancellor of Germany and President pro tempore of the European Council, stated that the EU had unilaterally decided that the draft text concluded in June 2019 was unacceptable and would require a substantive partial revision.
Even though this happened in July 2020, the fact did not prevent official and civil society forums in our country from continuing to talk about the existence of an Agreement whose birth certificate does not appear in any "civil registry or parish".
Given these circumstances and others, it would be a waste of time to rehash the debates that have taken place in the European Parliament and in several influential countries of the Old Continent, which have so far clearly and predictably objected to the signing of this kind of agreement.
Thus, those involved in the negotiations suddenly found themselves in a strong reconsideration of the original provisions on sustainable development in the draft agreement, as it was said in Brussels that this chapter of the draft did not address the real or fictitious doubts raised by the majority of the countries of the Old Continent, which for the past four years have been steadfastly opposed to endorsing the agreement. This rejection was also almost unanimous in the debates held in the European Parliament.
According to the flagship argument, this opposition was attributed to the rapid and illegal expansion of Brazil's agricultural borders, which stemmed from the brutal process of desertification that took place in the Amazon rainforest.
There are currently some forces in the Old Continent that are resigning themselves to being more receptive to this instrument, but only to save face rather than out of true conviction, as the current EU Trade Commissioner stated in Chile unequivocally. COVID-19, the sparks that flared up in Europe's relations with China and Russia, which plunged the world into the current economic, along with the agricultural and energy crisis, have led to a reconsideration of previous scenarios. No one knows for sure where all this will end.
Not until the draft amendment to the rules on sustainable development that Brussels belatedly sent to Mercosur is finalised (the most intense work on this proposal drew on exchanges between the EU and Brazil) will it be possible to put the jigsaw puzzle together and submit it for signature by the executive powers for subsequent ratification by the European Parliament and by the parliaments of each of the EU member states.
To understand what this sea of doubts and caution is all about, it is necessary to recall a revealing precedent. After the approval by the Canadian and EU executive authorities of the Comprehensive Economic and Trade Agreement (CETA), signed in October 2016, this instrument is only being partially implemented and has not yet been ratified by 10 of the 27 Member States of the Old Continent.
At this point, EU and Mercosur governments have yet to discuss a counterproposal on sustainable development in response to the EU version, an initiative that was to be negotiated in the coming months. Are we doing badly but on the right track? If it is about making foolish statements and playing with rhetoric, we are doing great. However, it is not wise to believe that we now have an agreement and only need to ratify it.
It is also quite surprising that, in view of a unilateral and arbitrary revision of the text as the one conducted by the European counterpart, Mercosur has not "proposed renegotiating the humiliating concessions on market access, the lack of regional disciplines on subsidies and the removal of the regulatory restrictions included in the June 2019 text" (see article published by the USAL). Or is it only Europe that has the right to have unilateral "political-doctrinal" ambitions and safeguards to honour its biblical Green Deal?
One would rather believe that our negotiators did not forget that the purpose of any Regional Integration Agreement is to significantly improve the conditions of tariff and non-tariff access that already exist in the markets involved, rights and obligations that were acquired in the Multilateral Trading System. The idea is to generate an Agreement that is WTO plus. It would sound like a serious oversight to consider as progress a few more concessions that already exist in the multilateral trading system.
Those who argue that the above overview is incorrect should help us to identify where the imaginary agreement stands and what it says.
Jorge Riaboi is an Argentine diplomat and a journalist