I had a very interesting conversation with Argentine trade officials, and DC-area trade specialists, on their view of Argentina’s position in the global trading system, especially in lieu of the upcoming WTO ministerial, and the potential EU-Mercosur trade agreement under negotiation. Here are some of the consensus observations:
- An EU-Mercosur trade agreement would constitute a watershed in South America’s trade dynamics. If secured, it could generate enormous incentives in the region to continue opening trade relationships with other parts of the world, regardless of the populism and nationalism impacting US politics.
- At the same time, Mercosur’s success as a trading block will also reflect the internal politics of the bloc—and those of its largest member, Brazil. At the moment, the situation is, from Argentina’s perspective, fraught with challenges, to say the least. The latest polls indicate that Brazilian Former President Luiz Inácio Lula da Silva and right-wing congressman Jair Bolsonaro are frontrunners for President, suggesting a less than enthusiastic embrace of trade. This could stymie Mercosur’s liberalization, though an EU-Mercosur deal would institutionalize commitments that would make full policy reversals difficult.
- Assuming Brazil’s political trajectory turns to populism, Argentina would have to explore what kind of bilateral agreements would be available to Argentina given its membership status in Mercosur. It is a partial customs union, but there is a “variable geometry” in discussions allowing some flexibility in member negotiations with third countries.
- In any event, the global rise of populism will require Argentina to review its own larger plans and aspirations as it assumes the Presidency of the G-20 in December. Perhaps most important, it may have to decouple WTO trade issues, which inevitably are tied to dispute resolution and enforcement issues, from other G20 prioties like climate change and technology. An attempt may also be made to bring Latin American views to the fore in order to enhance prospects of an EU-Mercosur accord, as well as its own reputation in the region.
Good food for thought figuratively, and literally.