Considering the recent declaration on the successful conclusion of the trade negotiations between Mercosur and the European Union (EU), assessments are already circulating on the costs and benefits attributed to the concessions that were agreed upon. Analysts tend to follow the evaluation criteria applied to similar commitments between countries at different levels of development and under the format of the so-called “last generation” free trade agreements (FTAs).

Without detracting from these approaches, a preliminary but different, systematic approach may also be useful. In this regard, priority should be given to the importance or weight of the various regulatory systems adopted unilaterally by some countries before the agreement in question to protect their markets in terms of health, safety, quality, and yield or performance requirements. These distinctions in the modalities and degrees of protection are usually referred to generically as “asymmetries” and are in addition to the structural disparities and inadequacies that point to a predetermined tilting of the playing field.

But even though these disparities and asymmetries are noted, it should be recognized that developing countries —such as the members of Mercosur— benefit when they formalize their FTAs with countries of greater relative economic development. The benefit consists of having numerous alternatives for obtaining compensation in the event of a violation or erosion of concessions. Indeed, given the extent and thoroughness of the subject negotiated in these treaties, interdependence ties are forged which, for relatively less developed parties, facilitate the search for proposals aimed at counteracting restrictive or intrusive practices adopted to their detriment.

In contrast to this benefit, there are potential risks arising from the lack of transparency in the last phase of the negotiation between the EU and Mercosur, when political pressure hastened the completion of the process. In this sense, the single-undertaking formula implies that, once the negotiation is concluded, the FTA becomes a single and indivisible commitment. Hence, it can no longer give rise to segmentations to justify disregarding some of its rules. This criterion is difficult to bear for the legislative bodies that must approve the treaty, when their members or the representatives of economic activities or members of civil society have not had the opportunity to intervene or be informed in a timely manner in the “attached room” about the ongoing negotiations. If, within this framework of lack of transparency, certain rules that could cause damage are finally agreed upon, then the single undertaking formula may have insurmountable consequences, since the legislative bodies must approve or reject the FTA in totum, without any margin for segmenting or biasing their pronouncement.

Interregional asymmetries in the name of global public goods

It is well known that FTAs between countries with different levels of relative development tend to consolidate pre-existing trade and economic relations, in principle due to the priorities assigned by each of the parties to expand their “traditional” exports and safeguard “sensitive” sectors and products.

However, recently, there have been other reasons for the relatively more developed countries —and the EU is a paradigmatic example of this— to seek, through international commitments, to validate pre-existing asymmetries in their favor.

This is based on the imperative of the times: to combat the acute processes of environmental and biodiversity degradation. To this end, the multilateral disciplines of the World Trade Organization (WTO) have been superimposed on other rules emanating from different agreements and referring to the need to protect “global public goods”. However, the extraordinary significance attributed to these values contrasts with the inability or lack of interest of the more developed countries when attempts have been made to find appropriate institutional means of safeguarding them. Consequently, invoking such “global public goods”, the EU arrogates to itself the right to unilaterally set environmental protection standards which, under the principle of national treatment, it applies to both domestic production and imports.

Interregional asymmetries inherent to technological dependence

Technological disruptions are widening the gap between the technical regulations in force in countries at different levels of development. This gap would facilitate introducing materials to Mercosur, inputs and finished goods that are already devalued due to their technological backwardness in the EU.

For similar reasons, until Mercosur countries manage to adequately regulate digital markets and services, their societies will continue to be exposed to digital products issued in the EU even if their supply in EU territory has already been banned or restricted. However, in an issue as sensitive today as generative artificial intelligence (AI), it should be borne in mind that the EU’s domestic legislation provides, in the event of the adoption abroad of rules similar to it (mirror clauses), the possible conclusion of mutual recognition agreements on the procedures for assessing conformity to the respective rules. This would prevent the intrusion in Mercosur of digital systems and contents already banned or classified as high-risk in the EU due to their manipulative applications and discriminatory control over people in areas where their safety, labor and educational insertion and access to social welfare benefits may be compromised.

Intra-regional asymmetries

For many years, the importance of the failure to harmonize macroeconomic policies among Mercosur member states was minimized. In this aspect, such insufficiency did not have a systemic impact, but only generated occasional crises. This was due to the limited aspirations exhibited by successive governments regarding the creation of a common market, as well as the limited willingness to enter into FTAs with relatively more developed countries.

However, the FTA with the EU makes it necessary to focus the analysis on this delicate issue, especially considering the obvious differences in the size of Mercosur’s economies and productive systems. Although the different member states have submitted specific lists for different concessions granted to the EU, it should be borne in mind that in principle the current regime between Mercosur member states guarantees the free movement of goods. Therefore, the choice of the point of entry to Mercosur of goods originating in the EU will be a decisive factor, either as a commercial strategy or as a settlement of direct investments for the production or assembly of goods destined for the enlarged market.

Thus, by the mere fact of not having advanced in the harmonization of macroeconomic policies, intra-Mercosur asymmetries would tend to increase in the face of a significant flow of imports from third countries of greater relative development. In this sense, the conclusion of the Mercosur-EU negotiations is a wake-up call.

_{*Machine translation proofread by Janaína da Silva.}