Economy

Argentina announces that it will no longer make agreements as a member of Mercosur

Paraguay says that is studying measures against Argentina; and Brazil, that "the uncertainty from before was worst"

Alberto Fernández, the new Argentine President.
Alberto Fernández, the Argentine President. Photo: Shutterstock

Friday night, Argentina announced to its Mercosur partners that it will not participate in future trade agreements of the bloc. Agreements already negotiated, such as that of Mercosur with the European Union and with EFTA (Switzerland, Norway, Liechtenstein, and Iceland)., would be maintained. According to Clarín, the Argentine announcement took place in the meeting of National Coordinators of the Common Market Group on external relations. It was made by videoconference by the Secretary of International Economic Relations, Jorge Neme.

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An internal Argentine government document leaked by the local media this Saturday indicates that the government of Alberto Fernández disagrees with the idea of ​​opening up more the economy in this moment of crisis, and also in the immediate post-pandemic period.

According to Clarín, Fernández’s government is in a minority position in the region against the more liberal views towards the economy of Jair Bolsonaro (Brazil), Mario Abdo Benitez (Paraguay), and Luis Lacalle Pou (Uruguay). The traditional Argentine newspaper points out that the crisis of the bloc is so great that its (newer) presidents were never able to speak via video conference.

On Friday, Fernández spoke, for the second time during the coronavirus crisis, with other members of the Puebla group, including former presidents in the region and political figures that have an anti-US view. Some political analysts say that these conversations motivated Fernández to take a stand against their neighbors and commercial partners.

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To the newspaper Valor Econômico, the secretary of bilateral and regional negotiations in the Americas, ambassador Pedro Miguel Costa e Silva, said this Saturday that the uncertainties surrounding future free trade agreements were worse than the attitude now taken by Argentina.

We will not wait, nor will we stop. Brazil, in alignment with Uruguay and Paraguay, will continue to be engaged in external negotiations

Pedro Miguel Costa e Silva, Brazil’s secretary of bilateral and regional negotiations in the Americas, told Valor.

According to Costa e Silva, Mercosur has been negotiating free trade agreements with Canada, Singapore, South Korea, and Lebanon. He said there are also preliminary talks underway or intentions to open a dialogue with India, Vietnam, Indonesia, and Japan.

Costa e Silva also told Valor, that Brazil did not receive the decision either with surprise or in a negative way.

Paraguay, in its turn, announced that it will discuss the situation together with the other partners of the bloc (Brazil and Uruguay), assessing whether there is any sanction applicable against Argentina at this time.

External conflict does not help the fight against the pandemic at all

In a statement sent to Clarín, the Argentine government said that it took such a position due to the pandemic of the new coronavirus, the need to turn its attention to internal issues to fight the disease, and to “protect companies, jobs, and the poorest families”. According to the newspaper, the Argentine government was opposed to the position of other Mercosur members of accelerating negotiations for new free trade agreements at this time.

Organizations such as the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), and even blocs like the European Union, however, recommend exactly the opposite.

In early April, together with the publication of a new report on the impacts of COVID-19 in Latin America, ECLAC stressed the importance of unity and coordinated actions among countries in the region in order to mitigate the negative effects of the disease on the economy.

The commission said that there’s no other strategic option for Latin American governments. ECLAC’s study indicates that the region needs a new development model to be able to restore conditions for recovery and development further along. Regional integration is crucial for this, mainly in the production and provision of essential goods.

Alicia Bárcena, executive secretary of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). Photo: The Dialogue.

Last week, during the launch of a second report, ECLAC’s executive secretary, Alicia Bárcena, stressed the message again:

“To have an impact in the new global economy, the region must move towards greater regional integration in terms of production, trade, and technology. Our countries’ coordination on macroeconomic and production matters is crucial for negotiating the terms of the new normal, particularly with regard to an urgent aspect of the current crisis and in the medium term: the issue of financing for a new development pattern with equality and environmental sustainability,” said Bárcena.