Our world remains on the path of globalization in spite of the challenges posed by nationalism, extremism, xenophobia, coronavirus etc. Even in the particularly challenging times of a global pandemic, countries are persistent in maintaining their global connections and, in particular, economic ties, in order to continue benefiting from world trade and business opportunities.
Of course, it is undeniable that globalization, here defined as increased interconnectedness of the world politically, economically, and socially, can also lead to tension, marginalization, and increased levels of inequality in spite of greater economic profits. What bears witness to this is the fact that, although world poverty has decreased in the last decades, global levels of inequality kept on rising.
Therefore, it is apparent that though there is potential within the current system, there is a need for a rearrangement, or better yet, a fresh perspective and an alternative to current operational mechanisms in order to address the downsides of the current track of globalization and allocate its benefits proportionately throughout humanity.
One way in which the present state of inequality is manifested is through the very division of the world into the “global north” and the “global south” (terms which will remain under quotation marks due to their relativity and many connotations to be briefly elaborated on below). Whereas some countries have seen proliferation in democracy, human rights, a rise in GDP and standard of living, and deserved thus to be placed in the “developed nations” of the “global north,” others have suffered from political instability and economic uncertainty, which have landed them into the “global south.”
The terms themselves point to the assumption that it is countries in the northern hemisphere, on the continents of North America and Eurasia that have prospered the most. Nevertheless, there are notable exceptions of Central America, North Africa and a good chunk of South Asia which are all considered to at least economically be south. Conversely, those states south of the equator, with the notable exception of Australia, are somehow condemned to particular challenges in further economic development under this “global south” definition.
These terms may thus imply geographic significance, but the exceptions listed above point out to the fact that a country’s positioning from the equator cannot be quite directly linked to the country’s GDP. Instead, no one country or one particular group of people is doomed to failure as terms may imply. The matter is actually far more complex and it seems that the current system and institutional complexities of globalization are at play. Thus, the countries seen as most “developed” and suitable to compete in the current system are those that have well-established markets and a well-arranged flow of goods. Those seen as best role models would be the US and the European Union which, not coincidentally, also happen to be major creators of the current global system.
Countries of the South American continent, in particular, have not been given a significant role in the creation of the current globalized system, which is evident in the fact that none of the permanent UN Security Council seats belong to a South American state and that South American countries are certainly not in the top stakeholders in associations such as the World Bank. This means that trade and political systems dominating the current track of globalization are not based on these countries' values and interests, so political decisions and trade flows are likely not to be inclusive and reflective of the region's perspectives, instead disproportionately more benefitting what is seen as the “global north,” which in this way largely reinforces the status quo and maintains reliance and dependence of the south on the north.
Regardless, there are still ways in which South American countries can advance their representation and role in the current system. One way that South American countries are increasing their competitiveness in the world market, which the current system necessitates, is by creating a strong regional body of their own, in likeness of that of the European Union, which was itself created in order to increase Europe’s competitiveness.
This body is Mercosur, a South American regional organization formed in 1991 when Argentina, Brazil, Paraguay, and Uruguay signed the Treaty of Asuncion which established political and economic union, thus creating a South American trading bloc. The Treaty of Asuncion emphasized the “importance of securing their countries a proper place in the international economy” and the Treaty, they concluded, “must be viewed as a further step in efforts to gradually bring about Latin American regional integration.”
This treaty gave birth to Mercosur as an embodiment of that commitment and, though its success is staunchly debated, it remains a strong base for moving the integration of the region of Latin America forward, as an economic model of the “global south” heading into the mainstream flow of globalization. This article will outline the challenges to the growth of Mercosur, as well as the potential and necessity of this organization for the future of Latin America and the so-called “developing world.”
Mercosur’s historical trajectory: Challenges and Successes
Since its conception in 1991, Mercosur remains with only four members, which are the original founding members. This is also reflected in its logo featuring the four stars of the southern sky’s famous Crux constellation, and the South American continent, but with special focus and light shone on the permanent and founding members, thus bringing special attention and significance to the founding members.
Venezuela had a brief flirtation with the group when it joined in 2012, but was suspended in 2016 due to the Maduro regime’s high levels of corruption and failure to comply with the group’s commitment to democratic values coming from the 1998 Ushuaia protocol on Democratic Commitment. Paraguay, one of the four founding members, was also ironically suspended from 2012 to 2013 due to doubts regarding its democratic stability, though this was seen as a political affair meant to allow space for Venezuela to enter, given Paraguay was the only center right government at the time that did not agree to accept leftist Venezuela.
These events shed some light on a widespread problem of political stability of the organization given that the last decade saw political play and tension that led to these fractures. There is also tension coming from economic pressure between Argentina and Brazil, the two largest economies of the bloc, which further complicates things and often blocks Mercosur countries from expanding trade outside of their bloc and Latin America.
This political instability and economic tension sheds light on the reason Mercosur is taking longer than the EU to integrate more members and connect the continent. There were, for example, attempts to create common currency similar to European euro, which would combine the Brazilian “real” and the Argentine “peso” to make the “real peso” (which also reaffirms who the two major players of the bloc are), but this idea is still debated and the countries remain worried of the risk of inflation that the region has witnessed too many times.
This is not to say that Mercosur does not remain in many ways a revolutionary body in nature. It is the largest trading bloc of the region, worth roughly $3.4 trillion, followed by the Pacific Alliance, which includes Chile, Colombia, Mexico, and Peru, at about $2 trillion. Mercosur has also succeeded in naming Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, and Suriname associate members, which all have reduced tariffs in trade with the bloc, with Bolivia in the process of acquiring full membership.
Furthermore, Mercosur’s decision-making body, called the Common Market Council, provides a high-level forum for coordinating political and economic policy, and its presidency rotates alphabetically to each full member every six months. While Brazil and Argentina remain in a competition for regional dominance, Mercosur manages to facilitate cooperation and balance, and has survived major stresses such as Brazil’s 1999 currency devaluation and Argentina’s 2001 financial crisis while remaining the largest trading bloc of the region, which adds credibility to the organization. Aside from trade benefits, citizens of the four full member countries have the ability to travel, work, and live anywhere within the bloc without restrictions.
Mercosur’s Present-Day Significance
Following the coronavirus outbreak, most Latin American countries instituted strict lockdowns and are still amongst the most affected countries of the world, with half of the top 10 countries with highest number of cases worldwide being in Latin America as of September 2020, even though Latin America comprises only less than 8.5% of the world population.
The impact of these lockdowns on the regional economy is unprecedented, with massive spikes in regional unemployment rates. Brazi, in particular, is suffering a historic record with 50% of the population out of work, and projected reductions of 6% in GDP that could set the region’s growth back for a decade and exasperate the region’s structural challenges.
While all of these economic challenges pose threats to promoting regional integration and creating a common currency, regional integration may be a key factor in reviving South America’s broken economy. This type of integration will in fact be crucial in mitigating the challenges posed by the pandemic, which call for a transparent, interconnected regional body where ideas, trade, investment, and innovation are well-facilitated, and where a high value is placed on political, social, and economic stability.
These promoted values and mechanisms would directly confront the impacts of a pandemic that is drastically reducing investment and productivity rates, exasperating the usual regional challenges. Mercosur is currently positioned in a way that makes it very suitable for bringing as much of the Latin American region as possible to the negotiating table and facilitating greater cooperation, and this opportunity should not be missed in today’s critical period.
Mercosur Going Forward
Another potential impact of Mercosur lies in its increased trade with countries outside of the bloc, with deals recently having been made with the EU and Egypt. The deal with Egypt is into its fourth year and may encourage further trade opportunities between Mercosur and the Middle East. However, the deal with the EU, in spite of years of negotiation and drafting, is now being lagged due to Amazonian deforestation concerns brought about by France, which Brazil, on the other hand, sees as protectionist policies on behalf of France which often attempts to, through protectionist policies aimed at strengthening domestic production by avoiding competition and free trade, protect its own industries.
Whether the protectionist allegations on behalf of France and the EU are true or not is less important than Mercosur’s position in this deal and the need of the “global south” to step away from dependence on the “global north.” It is important to note that, unlike the EU, Mercosur has begun its career not only as an economic treaty organization but has also included elements of political and social integration, as well as a clause relating to environmental protection. These policy elements add to the value and unique identity of Mercosur.
In addition, in order to allow for the truly long-lasting, sustainable, and authentic development of Mercosur, the region, and the so-called “global south,” it is important that Mercosur remains aware and true to these foundational policies no matter the outside pressures. This is why deforestation of the Amazon is not justified and future deals should be focused on issues such as environmental safety as well as the rights of indigenous communities, which Mercosur should see itself as a key actor in protecting and putting forth. In fact, the original 1991 Treaty of Asuncion mentions the “optimum use of available resources” “preserving the environment,” as well as “economic development with social justice.” This is exactly the alternative vision and priority that the current globalized system needs in order to improve its trajectory and something Mercosur can and should pride itself in.
One important deal currently being drafted, and of great importance to the southern hemisphere’s economic platform, is between Mercosur and Singapore that would cover a variety of issues, such as further easing trade barriers, boosting intergovernmental negotiation, providing space for e-commerce, supporting micro and macro enterprises, etc. Though this deal is also facing a delay, due to Argentina’s need to focus on the economic crisis at home ignited by the pandemic, the deal has huge potential due to Singapore’s immense experience in similar deals and its connection to Association of Southeast Asian Nation (ASEAN) countries, which are another significant bloc of the “global south.”
Thus, cooperation between ASEAN and Mercosur is exactly the kind of increased economic activity between the countries of the so-called “global south” that this article is arguing for. This would gradually shift the focus of globalization from the “north” and allow for better worldwide integration, expansion and diversification of available perspectives on development in the mainstream climate of the international community. It is important, however, not to let the pandemic slow down the process, and actually understand the benefit that integration and cooperation during the pandemic can have in the long-term.
In this way instead of continuing the current trends of environmental damage, sidelining of minority and indigenous groups, disregard for multilingualism and multiculturalism, and lack of concern for increasing inequality, there would come an age with a new perspective. Still, this can only be attainable if emerging economies of the so-called “global south,” and particularly so in South America, are able to stay true to their constitutional and regional agenda that, unlike northern counterparts, begin their focus with regard for these very issues. The “global south” has had time to observe and learn from mistakes or shortcomings of the current system which made it possible to have such holistic treaties as 1991 Treaty of Asuncion that made sure Mercosur actually positions environmental and social health as its priority where the EU and the US had to learn from their mistakes and are reluctant to, as stakeholders in the current system, take on a fully different base for the way they conduct business. Bolivia, a contender for membership in Mercosur, prides itself in being a plurinational state and actively recognizes historical injustices and works on maintaining its indigenous languages. If such examples remain prominent in the region, and are reflected in both text and actions, then the “global south” will provide a truly viable fresh perspective the current system needs.
Conclusion
Globalization continues to be challenged and it is certainly lacking even integration and provision of equal opportunity to citizens of the world in its current trajectory. Thus, greater integration amongst the countries of the so-called “global south” will allow for greater opportunity to be achieved in order to allow for diversification of major players in the global economy and political thought, allowing for more voices to be heard, including of those who have been largely on the losing end of the current neoliberal policies that govern the world as is the case with current “developing world of the global south.” Instead, the Latin American region and the “global south” as a whole can develop a system of support amongst the countries disadvantaged by the system and thus provide an alternative to what is positioned by those who are more likely to reinforce the status quo they benefited from.
To achieve this, it is important to turn to organizations such as Mercosur, that has already had some success in integrating the region, and make sure it addresses the political and economic instability, as well as increase its cooperation with other blocs of the “global south” aimed at political, economic, and social integration, such as ASEAN and the African Union and decrease dependence of the south on the north. These corporations would eventually begin to tip the balance of world trade, and allow these regions to promote economic equality and political independence on their own terms.
However, it is important that these organizations use their advantage of being newer and able to offer a new view to global development and progress. Mistakes of the past, such as disregard to ecological and social health that has been an unfortunate and gruesome collateral product of the current track to globalization as spearheaded by the “global north,” should be avoided, and this are some of the hopes and still insufficiently explored potentials that emergence of a strong southern market would bring to the stage.