The Hard Road To A South American Mercosur

In the past few years, South America has taken some decisive steps toward regional integration. Aware of the challenges of globalization, which have surfaced in international political and economic crises, as well as in the proliferation of transnational illicit activities that are beyond the capacities of individual states to control, some countries have begun to understand that the advantages of greater cooperation and commercial interchange are not the final goal. Rather it is necessary to coordinate responses not only in economic and fiscal policy, but also in social policy, the control of natural resources, environmental issues, defence and other areas, in order to face the threats that impinge on them. Above all, in the world as it is now developing, it is impossible to walk alone. It is essential to walk together.
To reinforce integration we need to increase levels of economic and commercial interdependence in the region. It is a complex but not impossible course. We need to develop a collective vision and cease to contemplate our own navels. The bigger economies must show greater solidarity with the smaller ones, but it is fundamental that the latter look to their own development, stop being parasites and stop hiding behind the farce of re-selling products brought in from other places without any local value-added, but simply adding labels that proclaim the product to be of national industry.
Little by little South America is moving away from a theory of regional integration that supposes a divorce between economics and politics, and which ended up imposing on many countries the fallacy of a "self-regulating market" as a force for development. Nevertheless, it is worrying to see that after the disastrous experiences with the application of market shock theories — in the words of Naomi Klein – these political measures are still being pushed by some OECD countries, multinational financial organizations, rightwing politicians and some businessmen, as a panacea for the economic protection of our countries.
From the North, we are plied with free trade treaties and liberalization and deregulation of financial structures, along with privatization and flexible labour markets as basic mechanisms for international economic integration. In South America there are people who hear these siren songs and defend the urgent need to create a free trade area along the lines of the FTAA/ALCA. With this they propose to cure the failures of the neoliberal model.
The regional integration of South America must retrieve the role of the State over the market, of society over the State and the market. The integrated South American states should take control of an integrated South American market. And Latin American society should play a fundamental role in participating to control States and integrated markets. This integration should open the way for a development model that allows for the advancement of each country as well as common advancement. The efficacy and the ability for channeling regional synergies depend on the ability to understand that this is a collective project, not an individual one, and to understand that this is an institutional fabric that is created through the process of integration.
To expand and strengthen South American integration, Unasur must be strengthened and extended. It is fundamental to move Mercosur towards a South American Mercosur(1). This depends on the capacity of our States to reconfigure their productive structures.
This will be possible if governments can transcend the limits of mere economic rationality and commit themselves to work towards a Common and Inclusive Economic Policy, which can take advantage of the region’s assets in food and hydraulic resources, raw materials and energy resources, generating a productive integration of a complementary character between countries.
In the new world order, the importance of South America for the international economy is undeniable. It is one of the most dynamic economic poles. At the present time, the GDP of the countries of South America represents 73 per cent of that of Latin America and the Caribbean, which in turn represents 8 per cent of world trade. In spite of its economic weight, the productive and export matrix of our countries continues to be centred on the primary sector and on intensive manufactures in primary resources and natural resources. This phenomenon responds to the high prices of commodities in the international market, but also to the concentration of investment, both national and foreign, in the exploitation of primary resources. In consequence, South American countries face the threat of deindustrialization and of economies centred on the primary sector. These processes lead to the emergence of productive enclaves whose wealth creation does not reach the whole economy, given the few productive networks they generate, as well as capital flight in the form of the repatriation of profits and benefits and the unlimited increase in imports. These enclaves in many cases are part of parasitical foreign investment that does not pay taxes and brings very little to our countries.
The way that Latin American countries have conceived their economic development has given rise to productive structures that are engineered to satisfy extra-regional needs. Because of this, the economic dynamics of the countries of the region contribute little or nothing to the collective economic dynamics of the region. Due to this individualist way of thinking of economic growth and the application of commercial policies based on indiscriminate opening to foreign economies, the greater part of South American economies have undergone processes of productive dismantling or the loss of economic dynamism in industrial sectors. At the same time large segments of our populations have experienced a fall in unemployment but growth in precarious employment. Here, if there is a diminishing amount of poverty, inequality is maintained and is at times even more evident.
It is necessary for South American economic integration to move towards the articulation of national economies, and for productive structures to look to satisfying the needs of the people of the region, in a way that allows us to develop our manufacturing sectors and services. In this sense it is important to establish legal and technical conditions to promote regional productive investment. Finally, it is necessary to set up productive conditions that make it possible for each and every one of the economies of the region to reach high levels of competitiveness in order, at a later moment, to be able to compete in the international markets of manufacturing and service sectors of medium and high added value.
In the difficult path towards a South American Mercosur, Mercosur should become the bridgehead to establish a South American commercial bloc, animated by principles of solidarity, complementarity and the consideration of the asymmetries in the levels of social and economic development of different members, that prioritizes the role of the State, and has as its goal the well-being of the population rather than the profits of big capital, and which can serve as an example of a different regionalist model, in the face of traditional schemes that are based on market fundamentalism.
(Translation: Jordan Bishop, for ALAI)

Kintto Lucas is the Roaming Ambassador of Uruguay for Unasur, Celac, and Alba. Former vice foreign minister of Ecuador.

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