On Monday, 6 March 2017, Dr. Ignacio Bartesaghi of Catholic University of Uruguay shared his view on a brown bag seminar at the Universitas Pelita Harapan Center for International Trade and Investment (UPH-CITI). The seminar entitled “ASEAN-MERCOSUR: Unlocking the Potential of Economic Cooperation”.
Dr. Bartesaghi started his presentation by explaining the background of MERCOSUR (Common Market of the South). It started with the bilateral cooperation between Brazil and Argentina in 1985, and then later in 1991 Paraguay and Uruguay joined the negotiation. The four countries concluded the Asuncion Treaty in 1991 which formally established the MERCOSUR. In 1994, the Ouro Preto Protocol confirmed the legal status of MERCOSUR as a Customs Union. Progress have been made since then, including the establishment of MERCOSUR Parliament and Permanent Review Tribunal to enhance the organizational structure of MERCOSUR. In 2012, Venezuela acceded to MERCOSUR, but is currently suspended due to the domestic issues in Venezuela.
According to Dr. Bartesaghi, the suspension of Venezuela’s membership has some implications considering the decision-making process in MERCOSUR is done through consensus. As a Customs Union, MERCOSUR countries are not allowed to sign trade agreements bilaterally (although some exceptions were made for Uruguay) and should speak as one voice. He pointed out that the suspension of Venezuela’s membership has practically hindered MERCOSUR to conclude trade agreements with other country or region. Furthermore, he highlighted that although MERCOSUR is a Customs Union, but its Members still have different external tariffs for some category of goods.
Despite some internal issues in the past, Dr. Bartesaghi is optimists about the future of MERCOSUR. He argued the changes of regimes in Brazil and Argentina (two economies which contribute around 70% of MERCOSUR GDP) will subsequently change the perspective of MERCOSUR to be more business-oriented. He stated that the rise of ASEAN countries will create opportunities for economic cooperation between the two regions. He mentioned that trade between the two regions have increased at a rate of 14-17% yearly from 2001-2015. The commodities traded between the two regions are also complementary according to Dr. Bartesaghi. ASEAN’s exports to MERCOSUR are dominated by machineries, electrical devices, automotive to MERCOSUR, while MERCOSUR’s exports to ASEAN are mainly food, cereals and minerals. Finally, should the two blocs decide to have a partnership, he suggests to include services trade, investment and other aspects in the agreement.
There were more than 25 participants who attended the seminar coming from different backgrounds, including law firms, embassies, businesses, academics, researchers and students. The discussion continued after the presentation as the participants posed many questions regarding the topic.