02/08/2022

Recovering the Social and Productive Mercosur

The Mercosur is merely surviving. Several factors have brought about this situation: changes in the political scenario, mainly in the last five years; the Brazilian government's predatory policies; omission and economic and financial difficulties.

The intra-bloc trade has lost its dynamic. It is difficult to overcome the claims of some of the governments of the bloc, which express their preference for a free trade area and then advocate the negotiation of bilateral trade agreements with the main powers (USA, China, etc.). They also propose alignment with other integration blocs (The Pacific Alliance) and individual membership to agreements such as that of the European Union. If implemented, these intentions would seriously jeopardise the integration of the Southern Cone and the reactivation of UNASUR.

Without delving too deeply into the statistics, let us examine the implications of this situation in Brazil:

- In 2021, Brazilian exports reached USD 280 billion; imports amounted to USD 219 billion, with total trade at almost USD 500 billion.
- Intra-Mercosur trade reached USD 27.8 billion in 2011 and dropped to USD 16.9 billion in 2021.
- In comparison, total trade with ASEAN totalled $8.3 billion in 2011 and reached $19 billion last year.
- Trade with China, rose from $46.5 billion in 2011 to $90 billion in 2021.

With the certainty that Mercosur benefits Brazil, some proposals remain with focus on issues concerning productive and social development.

1. Employment and income

In Argentina, Brazil and Paraguay, the unemployment rate is high, as is the informality of labour relations. Only Uruguay maintains a significant degree of protection. In Brazil, 12 million people are unemployed, more than half of them in precarious conditions. In Paraguay, jobs in the "maquilas" (which already include more than 200 Brazilian companies) are the fastest growing, with poor labour and social security standards.

Immediate actions:

- Diagnosis of the situation; implementation of emergency measures to address the most critical areas.

2. Productive integration

Agricultural and industrial development programmes should take into account undertakings that increase the supply of employment in the Mercosur area and contribute to the construction of productive chains between industrial initiatives and the agricultural sector.

Immediate actions:

- Encourage producers, agricultural and family farming businesses with funding and incentives to process their grains, meat, leather, minerals, ethanol, fibres, fruits, etc., in their places of origin
- Promote the fair development of all MERCOSUR countries, in order to strengthen the sub-regional bloc and attract South American neighbours and members of other integration processes (The Andean Community and The Pacific Alliance).

FOCEM

- Created in 2005, FOCEM should once again become the instrument of promotion, if possible as a development bank, capable of adding resources to the financial contributions of governments. It should focus on the creation of value chains in two or more MERCOSUR countries, in more labour-intensive sectors. FOCEM should also give priority to funding small businesses, family farming and the solidarity economy.

3. Labour and Social Rights

Over the last six years, the areas of labour issues have been relegated to an insignificant role, mainly due to the anti-social policy of the Brazilian government. The Mercosur Socio-Labour Declaration (DSL), for example, is a promotional document that should ensure compliance with agreed standards.

The Labour Market Observatory could be an important instrument for taking a snapshot of the labour market in the bloc and provide a space for tripartite consultation on measures that contribute to the generation of quality jobs.

Immediate actions:
- Update the study of the different national labour legislations, and promote a structure to monitor compliance with the DSL and provide the conditions for the operation of the Labour Market Observatory, which should liaise with the National Statistical Institutes and present its data.

4. Social dimension

In 2007 the MERCOSUR Social Institute (ISM) was created and in 2008 the Strategic Plan for Social Action (PEAS) was approved to guide government initiatives and the work of the ISM in policies of inclusion, and access to education, health and public services in general. The ISM has been practically abandoned in recent years and Brazil has stopped paying its dues. The accumulated debt exceeds 3 million dollars.

Immediate actions:
- Settle debts and allow the ISM to support programmes and actions to tackle hunger and inequality.
- Strengthen Brazil's representation and action at the ISM.

5. Attention to borders

Border residents deserve special attention in the areas of health, education, border transit, social security and employment

Immediate actions:
- Simplify and standardise sanitary requirements for cross-border transit of persons, animals and goods
- Facilitate access to educational institutions in the country itself and in the neighbouring country without discrimination.
- Ensure public health care and/or access to appropriate health schemes in any border location.
- Access to work on either side of the border, without documentation constraints, and the recognition of labour and social security rights.

6. Political and decision-making bodies

In over 30 years there has been a profound transformation in the bloc with the incorporation of new structures, albeit without the attempt to review what has been left behind. The existing labyrinth of numerous overlapping subject matter groups, rules and bodies needs to be rectified.

Immediate actions:
- Update the operation of the trading patterns, analyse the flow of information and decisions of the bloc.

7. The Social Economic Advisory Forum and Parlasur

FCES - The Social Economic Advisory Forum – began operating in 1996. Different segments of civil society are represented in the FCES, which demand observation spaces in the fields of negotiation. The FCES is in a position to reach consensus on proposals and demands that contribute to the advancement of integration. However, it has lost relevance and no longer receives funding or support from the Mercosur Secretariat for studies and research. It is necessary to ensure that the FCES has full access to information and the necessary conditions for its operation.

PARLASUR - Created in 2006, the Parlasur (MERCOSUR Parliament) never managed to fulfil its agenda, which foresaw the election by direct vote of the representatives of the 4 countries. In 2019, at a meeting of Mercosur Presidents, it was agreed to suspend direct elections to the Parliament, and it was decided that the current members would serve out their term of office. The next members will be elected by the respective National Congresses. The rationale of the presidents was to cut unnecessary expenses and reduce bureaucracy.

Immediate actions:
- Reopen the debate on the best system of operation and representation, in order to guarantee its role of ensuring transparency and democracy, as well as representing the populations of the 4 countries in Mercosur's decision-making bodies.

Finally

Our goal with this paper was to bring to the debate some issues and weaknesses that need to be amended and rediscovered. These proposals come from our experience as direct stakeholders in the Mercosur negotiation process, either as representatives of the Brazilian state in the negotiations or as part of the Brazilian trade union movement.

María Silvia Portela de Castro is a sociologist, professor at the Programa de Pós-Graduação em Integração da América Latina Universidade de São Paulo, and former advisor to the CUT for the Coordinación de Centrales Sindicales del Cono Sur and to the Foro Consultivo Económico Social -FCES. She currently serves as a consultant to the Instituto del Lavoro and the Friedrich Ebert Foundation.

Ambassador (r) José Eduardo M. Felicio is a Brazilian Diplomat. He was Executive Director of the MERCOSUR Social Institute, Ambassador to Paraguay, Ambassador to Cuba, Ambassador to Uruguay, Representative for South American countries, and Undersecretary and Mercosur Coordinator for Brazil between 2003 and 2006.