MERCOSUR and the European Union

Variation and Limits of Regional Integration

Mikhail Mukhametdinov

• Publisher: Palgrave Macmillan
• Year: 2018
• Print ISBN:
  9783319768243
• eBook ISBN:
  9783319768250
• Topic: Politics & International Relations
• Subtopic: American Government
• Index: Politics & International Relations

The book draws comparison between MERCOSUR and the European Union to explain variation of regionalism and to expose its limits. The project is based on the idea that contemporary examples of regionalism should be evaluated against several propositions of multiple integration theories rather than against a single theory. In order to systematically explain why and how integration outcomes in MERCOSUR differ from those in the EU, the author develops an analytical framework for the comparison of the two blocs. MERCOSUR is compared with the EU by the use of the various criteria of economic interdependence, economic convergence, intra-bloc size and interest asymmetries, cultural diversity and geostrategic motivations, which are identified as the salient parameters of integration theories.

© The Author(s) 2019

Mikhail MukhametdinovMERCOSUR and the European Unionhttps://doi.org/10.1007/978-3-319-76825-0_1

Begin Abstract

1. Analytical Framework for the Comparison of Regions

Mikhail Mukhametdinov¹

(1)

Harvard University, Cambridge, MA, USA

End Abstract

Recent years have brought uncertainty over regional integration efforts and disappointment about asymmetric development results enforced by regional blocs. However, interest in regionalism remains strong. Increasing political and social instability along with coups and revolutions across the world lay new hopes on regions as potential sources of stabilizing influence. In South America, interest in MERCOSUR is sustained by dramatic turmoil in Venezuela after the death of Hugo Chávez in 2013, and controversial presidential impeachments in Paraguay (2012) and Brazil (2016). Through suspension of Paraguayan membership in 2012–2013 and Venezuelan membership since 2016 MERCOSUR has shown itself as an actor capable of influencing domestic politics in its member states. At 26 years of age it has a fairly long history and a number of unique features that tell it apart from other regional organizations. Some observers consider MERCOSUR to be the world’s second most integrated multilateral regional group after the EU.¹

However, in relation to the EU, MERCOSUR’s integration achievement differs significantly across various dimensions of social life. Its institutions are less developed and they deal with a narrower scope of issues, particularly in the economic and political dimensions of integration where MERCOSUR lags behind. A peculiar feature of the MERCOSUR process is that over half of its legislation is not enforced. The ‘dead letters’ of MERCOSUR’s intergovernmental agreements at times make it difficult to understand what MERCOSUR really is and what it does, and they certainly account for what may be perceived as a failure of integration. This monograph evaluates the current condition of integration in MERCOSUR, explains why, in comparison with the EU, MERCOSUR has not advanced in its development, and suggests that the future shape of this polity will remain different from the EU. To these ends the monograph proposes a special analytical framework for the comparison of MERCOSUR with the EU, which can be used for the analyses of other contemporary regions.

Both MERCOSUR and the EU are perceived as regions in the literature on regional integration, which elaborates on a wide range of cooperation issues within various groups of countries. The majority of scholars adhere to a broad definition of regional integration as ‘institutionalized cross-border cooperation.’ There are no excessive criteria in the definitions of institutionalized, cross-border, and regional.² The degree of institutionalization may vary from formal organizations to informal political consultations. Cross-border cooperation may apply both to spontaneous social interactions across borders between territories of contiguous states and to government-promoted inter-state cooperation. Regions can be defined as groups of contiguous territories linked by a degree of interdependence that incorporates interaction and possibility of cooperation.

Some authors insist that integration should be defined in more narrow terms to distinguish it from coordination and other forms of cooperation.³ Thus coordination most commonly implies exchange of information. A deeper form of shared action, cooperation means taking joint decisions. Integration more accurately refers to policies and decisions stemming from binding agreements and supranational institutions. The following stage of merging national policy emitters into one entity and the single policy coming from such entity is called unification. I propose to define regional integration primarily as intentional harmonization of national policies among several countries as pursued by a common regional authority. Such understanding of integration automatically brings forward the necessity to consider the specific areas where integration (or policy harmonization) is taking place, thus highlighting the dimension-specific and issue-specific character of the process across various temporal and spatial examples of regionalism. However, integration in narrow terms is not the exclusive focus of this monograph because other forms of cooperation accompany it and affect regional cohesiveness.

There are several grounds for the comparison of MERCOSUR with the EU. Both are geographically contingent areas. Both have expressed commitments to a common market and have undertaken measures for its full or partial implementation.⁴ The two blocs have accepted states’ competences in the field of commercial policy and have received powers to represent their members in international commercial agreements as a single entity. Thus they have acquired international juridical personalities and recognition as actors in international law with the ability to be subject to international agreements. On the surface, the two blocs appear to have parallel institutional systems, and every major EU institution has an analogue in MERCOSUR. Also, the two blocs share relative similarity in terms of the economic process. They generally confirm the conventional logic of economic integration sequence from an FTA to a customs union and then to a common market.⁵ Common to both blocs is frequent rhetoric about integration and promotion of integration symbols, which, for example, have led to the emergence of courses on regional integration in universities and the appearance of MERCOSUR and EU logos on national passports issued by their member states.

However, MERCOSUR unites former colonies, which were and remain dependent on trade with former colonial powers and on acquisition of capital and technology from rich countries. Regional integration in MERCOSUR is unable either to substitute this historical North–South relationship, nor to significantly reduce the dependence of its members on better-developed partners. The EU, on the contrary, is a group of predominantly rich and self-sufficient countries. MERCOSUR is also a more recent process. It was founded in 1991 while the EEC has operated since 1957.⁶ MERCOSUR has fewer member states, five versus 28 in the EU. MERCOSUR’s basic indicators differ substantially from those of the EU correlating from 1:1.8 (population) to 2.9:1 (territory), 1:4.4 (GRP), and 1:2.5 (GRP per capita).⁷

The degree of commercial interdependence within the EU is 10 to 15 times that of MERCOSUR (See Table 2.​1.​B). There are 24 official languages in the EU and only three in MERCOSUR reflecting dramatic differences in the degree of cultural diversity. Further, the EU with its three principal actors Germany, France, and Britain (to be replaced by Italy after Brexit) is unfamiliar with the degree of power asymmetry in MERCOSUR where Brazil stands out as a predominant country. The two blocs have had different geopolitical motivations. These are most prominently characterized by the different nature and impact of the US policy in relation to the two regions, and by consequences of WW2 in Europe and the lack of a security dilemma in the Southern Cone prior to the formation of the blocs.

Unsurprisingly, MERCOSUR and the EU achieve varying results across different regional policy domains. The contrast between their measures in economic and cultural integration is particularly illustrative. Thus the EU is characterized by higher economic density, and it has been successful in the facilitation of intra-regional economic exchange through the euro, a single currency among the majority of its members. Rather than an economic community of the EU type, MERCOSUR represents a cultural community with a more meaningful policy of cultural integration. It has committed Brazil to the teaching of Spanish and the Spanish-speaking countries to the teaching of Portuguese in secondary education. Such an undertaking would be impossible in absence of the regional organization.

Despite parallel institutional structures in MERCOSUR and the EU, there is a striking variation between the forms of regional institutions and the ways they operate: the EU is an organization with various supranational competences compared with the strictly intergovernmental structure of MERCOSUR. The EU exercises supranational authority in many economic, environmental, juridical, and security spheres. Depending on the area, EU institutions can take decisions by consensus, absolute majority, or qualified majority. In MERCOSUR there is no regional bureaucracy, and all officials responsible for the integration agenda are representatives of the member-state governments. The major regional institutions with decision-making powers are collegiate. They do not operate on a permanent basis, but meet periodically and produce decisions through intergovernmental mechanisms that always require unanimity.

In the analysis of quality and outcomes of integration, regional institutions have an important position both as by-products of integration and as agencies that affect the processes through their various functions and roles, which stem out from their specific features. Supranational institutions in the EU are believed to pursue interests of the bloc as a whole, and at times they are able to enforce decisions contrary to the will of individual states.⁸ However, the MERCOSUR intergovernmental system is restricted to advancing only those measures of integration that have been agreed upon by all member states. This might reduce the scope, depth, and speed of integration. The strictly intergovernmental character of MERCOSUR has often been blamed for a slow progress of integration after the mid-1990s, including the inability to achieve a common market.⁹

Concurrently, MERCOSUR lags behind the EU not only in institutional development but also in economic integration. Malamud observes that ‘despite its name, the bloc has not become a common market. At best, it has established the blueprints for a customs union, but even the free trade agreements are repeatedly infringed.’¹⁰ In the early 1990s MERCOSUR’s dynamism was astonishing. Measures for trade liberalization were taken rapidly: between 1991 and 1998 intra-regional trade increased four-fold from US$6 milliard to 24 milliard (Table 2.​2), and intra-MERCOSUR exports grew relative to total region’s exports from 10% to 24% (Table 2.​2). However, after 1998 MERCOSUR’s dynamism faded and the bloc ‘entered a pattern of cyclical crises and rebounds that have defined it.’¹¹

The slow progress of institutional development and policy harmonization in MERCOSUR vis-à-vis the EU might seem surprising as a number of factors could have allowed expectations of a faster progress of MERCOSUR integration, especially given the popularity of integration discourse in the region. For example, MERCOSUR has to reconcile far fewer member states over common policies; and there are fewer cultural barriers to intra-regional integration among its countries. The more rapid transformation of the world economy today than in the years of the EC formation in the 1960s–1980s may have been expected to accelerate the consolidation of the common market in South America. When the EEC was born, few foresaw the freedom of capital movement within its borders; on the other hand, MERCOSUR has evolved in a period when capital transfers are so significant that they cannot be ignored. Also, the historic precedent of European economic integration offers lessons and a model to pursue, and policy-makers in MERCOSUR are well aware of this integration experience.

The literature has recorded several explanations as to why MERCOSUR’s economic integration and institutional development have been slow after the initial advances of the early period. There is an argument that the Southern Cone’s low susceptibility to democratic ideals and the lack of political will prevent MERCOSUR from forming EU-like supranational institutions.¹² Another view blames the persistence of ‘magical realism’ and ‘cognitive dissonance’ in the minds of MERCOSUR policy-makers: suggesting that because o...

Table of contents

• Cover
• Front Matter
• 1. Analytical Framework for the Comparison of Regions
• 2. Economic Integration and Interdependence
• 3. Structural Factors of Regional Integration
• 4. Cultural Diversity and Community-Building
• 5. External Factors and Geostrategic Considerations
• 6. Conclusion
• Back Matter