Financial Express - 14 May 2020
Differences among members, India-Mercosur PTA talks stalled
By: Huma Siddiqui
Sources have confirmed to Financial Express Online “We are aware of the differences between the members of the grouping. However, this has not been conveyed to us officially. Before the global lockdown due to COVID-19, efforts were made to set a date for negotiations. There has been no response so far.”
The ongoing differences between Brazil and Argentina are expected to have important implications for the future course of action within MERCOSUR and its engagements with other trade and economic partners including India. Sources have confirmed to Financial Express Online “We are aware of the differences between the members of the grouping. However, this has not been conveyed to us officially. Before the global lockdown due to COVID-19, efforts were made to set a date for negotiations. There has been no response so far.”
“Despite their difference, India must show its willingness to upgrade India- MERCOSUR relations into a more comprehensive economic partnership agreement. Many times the bilateral difference can get subdued when the countries in question engage as a grouping with other economic partners,” the source quoted above said.
According to Gustavo Rojas, researcher, Center of Analysis and Dissemination of the Paraguayan Economy (CADEP), “Since the inauguration last December of the President of Argentina, Alberto Fernández, the presidents of Brazil and Argentina have failed to establish a simple conversation, leading the regional decision-making process towards progressive paralysis.”
“The growing divergences between Mercosur’s two main partners come at a time of profound contrast between the level of approval of both presidents. While the COVID-19 policy has raised the approval of the Argentinean President Fernández to record levels, the denial of the health problem and the demonstrations of authoritarianism and misgovernment of Brazilian President Jair Bolsonaro have not reduced the rising number of dead and unemployed, just contributing to raising political conflict in that country to unprecedented levels,” Rojas opines.
India has been reaching out to the members of the grouping to fast track negotiations for the expansion of the existing Preferential Trade Agreement (PTA).
So far, as has been reported earlier, officers have confirmed that there is no headway in the negotiations and since the lockdown, the negotiations are not likely to happen soon.
“Of course there are options to have video conferencing with the members, but they need to first resolve their internal differences,” said the source.
Member countries including Brazil, Argentina, Paraguay and Uruguay (MERCOSUR) have been in talks with India, seeking expansion of the existing PTA, in an effort to achieve a trade target of $30 billion in 2030. Once this is expanded, this will strengthen trade relations between the countries involved.
South Korea-Mercosur FTA
Due to the differences between the two leaders of Brazil and Argentina that the talks related to MERCOSUR-South Korea FTA have hit a wall.
Sharing his view regarding this Rojas says, “The insistence of the Brazilian Government to conclude the negotiations of new extra-regional Mercosur agreements, particularly with South Korea, without concluding the due internal consultations with its private sector and with the other members of the bloc, in a more introspective world in the face of the health and economic challenges derived from the COVID-19 pandemic (which currently has Brazil as one of its world epicentres), is proof of the uncritical liberal fundamentalism of its economic team.
“The divergences between Brazil and Argentina also encompass the Brazilian proposal to promote unilateral reductions in the regional common external tariff, which would directly impact intraregional trade, already declining due to the deep recession facing both countries,” the researcher adds.