FROM MERCOSUR THIRD GENERATION

The creation of the common market, Mercosur, Argentina, Brazil, Paraguay and Uruguay, took placed with the Ouro Preto Protocol, in December 1994, being President of Brazil Itamar Franco. That is, 31 years, several generations of politicians and diplomats have passed, in fact the joke between them is that Mercosur is a third-generation agreement, because it takes so long to consolidate that the next generations of diplomats will continue to negotiate. But what's really left?

From a commercial point of view, which is the most important, regional trade, in decline, represents 15% of foreign trade, while in the EU it is 60% and in ASEAN, 22%. Of the total Brazilian exports, 7% are destined to Mercosur, but the surplus, of 11.5 billion dollars, is significant. Trade is less of commodities and more of manufactured products and energy.

In this context, the automotive agreement is essential, responsible for 50% of trade in the bloc. The agreement is totally dominated by multinationals, in a sector in profound technological and structural changes, which survives with heavy subsidies and exemptions of all kinds. With the eventual agreement with the EU, this will be the sector that will set the tone for the consolidation or reforms of Mercosur.

Many of the problems that hinder greater trade between countries are due to political relations between the leaders of member countries. Lula and Millei don't talk to each other, ideology prevails instead of being a state project and especially a project in which entrepreneurs have greater interest. Production chains, with the partial exception of automotive, do not exist. The infrastructure has not improved in these 31 years. There are no binational companies, with the exception of Yacireta and Itaipu, and more competition than cooperation. Argentina's economic and political instability complicated the business flow, and the entire bloc has a new and powerful trading and investment partner: China.

The bloc's trade agreements with EFTA (Switzerland, Norway, etc.), Israel, Singapore and eventually with the EU did not improve the competitiveness of the bloc's economies. Also the entry of Bolivia as the 5th member will not improve, as well as the expulsion of Venezuela long ago, because it is not a democratic state, did not increase business.

On the one hand, Uruguay wants an agreement with China, while Paraguay allows the US to set up a military base and buy military equipment, as Argentina also does there. There is no way not to take into account new technological and geopolitical contours. But if entrepreneurs don't embrace the project and especially haven't prepared for the day after, nothing will work. By the way, it probably hasn't worked better so far because of that. A missed opportunity. Third generation.