‘These measures will raise the ceiling on Mercosur-Pacific trade’
Chile’s Deputy Minister for Trade Paulina Nazal addresses the efforts to boost trade and integration between the two regional bodies
Buenos Aires hosted the Foreign and Trade ministers of the Pacific Alliance and Mercosur countries last week, at an event described by its participants as establishing a concrete roadmap for a process of trade and production integration at a time when protectionist sentiment is on the rise.
That roadmap, which sets out consultations in areas of tariff and non-tariff barriers, trade facilitation and integrating value chains, set outs a path for the two Latin American blocs to come closer after earlier failed attempts. In conversation with the Herald after the meeting wrapped up, Chile’s Deputy Minister for Trade Paulina Nazal set out the implications of the roadmap, its potential pitfalls, and what it could mean for the region.
There have been attempts at bringing the Mercosur and Pacific Alliance (PA) closer before, and they have not been successful. What makes you believe that this time will be different?
I think that’s up to political will. The current global context, and as argued by our Foreign Minister Heraldo Muñoz and is shared by the Mercosur and in particular Argentine Foreign Minister Susana Malcorra, is one of uncertainty. And within that uncertainty there has been an union of political wills in the Mercosur and the Pacific Alliance so that we have a concrete roadmap for the work ahead. What we wanted to do here is make clear the express commitment by eight countries to continue working on this roadmap with schedules and concrete activities after each bloc has identified the respective areas to work in favour of convergence.
Given that uncertainty, in which there are protectionist and xenophobic forces, isn’t this period now more difficult than ever to promote these kinds of agreements?
First, it’s a question of how Latin America responds to those protectionist and nationalist forces. And that’s why this meeting was doubly important. First, that a meeting with the Mercosur in this context exemplifies that there’s a will to move forward and that Latin America sends the message that it’s possible to have a dialogue on increasing trade in goods, services and investment. Secondly, we have already been moving forward with measures to facilitate trade. Those include customs measures, the standardisation of customs certificates, creating production chains. We want to boost trade within the Pacific Alliance, and we want to increase beyond as well and our natural partners are countries like Argentina and Brazil.
What kind of consultations have you had with business and union stakeholders with regard to the roadmap?
In terms of the Pacific Alliance, we have fluid dialogue with the business sector. The PA has a structure called the CEAP, which serves as a way to receive comments from the private sector from all four member countries. One of the comments from the CEAP was the lifting of tariff and non-tariff barriers that the countries face to increase trade. And that was discussed with the members of the Mercosur. They said that their business councils are looking forward to working on these kinds of measures, and there was talk of how to involve the business sectors in the discussions. The PA has business consultations built-in to its framework, but the Mercosur doesn’t have a single council, instead each country has its own.
And what about the unions?
Within the PA, there isn’t a formal dialogue with the unions because the PA doesn’t generate “noise” so to speak for labour. The PA is well-received by business and labour sectors because it has generated work. And there is a consensus on that in all four countries. There are other elements to the Pacific Alliance that go beyond trade, there is also work in terms of science and technology scholarships, work in gender, innovation, small and medium businesses, a labour group that focuses on corporate social responsibility. In terms of Chile, we’ve had bilateral contact with seminars with various countries of the Mercosur and yes, the unions have expressed worries about whether greater trade generates favourable work conditions and creates jobs. But I have the feeling that there could be a change with this new effort within the Mercosur and with regard to the Mercosur’s relationship with the PA and I believe that could be constructive. There’s plenty of commitment within the Mercosur and that integration and trade be a pillar for development.
What is the timeline for this roadmap?
The roadmap has a preliminary phase which is about exchanging information between customs offices. Five areas to work on were identified, such as integration of operations and how each customs system works. What will happen now is to see how many of those operations can converge. That roadmap requires a great deal of understanding how each works. There are also concrete elements like meetings with small and medium-sized businesses and there are plenty of meetings and seminars in the coming months.
What kind of a role does Chile have in this process? Within the Pacific Alliance, does the proximity and intensity of the connection of Chile with the Mercosur countries give it a leadership role?
Even before we took on the pro tempore presidency, our Foreign minister had proposed what he called the “convergence in diversity with Mercosur.” The role of Chile in that respect has undoubtedly been one of leadership. What we want to do is to promote this effort at the regional level, and we have been part of the articulation of a roadmap. We are convinced that this is fundamental, and we have done this as part of the Pacific Alliance but also on the bilateral level with Argentina.
What impact will the presidential elections in Chile have in this process?
We have laid the foundations for this effort to transcend any change of government in Chile. And it has always been that way. Note that some fundamental parts of the Pacific Alliance were negotiated at the end of the previous administration. As such the Chilean state has sought to have continuous support for the commitment of integration and we are sure that will continue.
While there are obviously efforts at trade integration between the Mercosur and the PA, what of the possibility of a more political or institutional fusion of the two blocs?
The objective has never been to fuse the two blocs, and that’s important. The blocs are very different and they have gone forward at very different rates and have very different mechanisms and focuses. But recognising those differences, we can look for the areas of common interest. And these meetings are part of that, they make progress.
Trade within the region is low, but how much of that is because of these trade barriers or also because the markets are elsewhere or because countries produce similar goods? Is there a ceiling on intra-regional trade in Latin America?
All of these things in the roadmap help to raise the ceiling on intra-regional trade a great deal. We also do have a great deal of production in similar items. For example, our primary trade partner is China and then the United States and we have several Asian countries in our top five because we have complementary economies. They produce manufacturing, and we export copper, copper derivatives and agroindustrial goods. But we also have a great deal of trade with the Mercosur countries and we want to see that trade increase within the region, even if there is a trend toward looking at Asia within Latin America.
Do you see a uniform position within the Mercosur on these issues?
Yes. From the meeting you could tell that there was a common position among the four signatory states, and they are completely committed. They want to export more and grow.
What are you worried about in terms of possible obstacles?
A natural obstacle is time. Getting eight countries to agree isn’t easy. Sometimes it takes months to just schedule meetings. A way past obstacles is to be pragmatic and realistic and take things one step at a time. We shouldn’t set an agenda that is too ambitious, that sets expectations too high.