MercoPress. South Atlantic News Agency

Mercosur summit first week of July; Brazil and its domestic integration policy

The relative success of the 33-year-old trade block is still fighting for a major trade and cooperation deal with the European Union, finalized over two decades ago, but facing rejection

Next month, from Thursday, July 4th to 8th, the Mercosur pro tempore presidency will be handed by Paraguay to Uruguay, at the capital Asunción during the regional presidential summit. On the occasion, Paraguayan president Santiago Peña will be giving the Mercosur presidency to Uruguay's Luis Lacalle Pou. Still, it will be interesting to see how leaders of the two major members, Argentina's ultra-liberal Javier Milei and Brazil's populist Lula da Silva, who are not on talking terms, will approach circumstances if they effectively attend the summit.

However the relative success of the 33 year old South American trade block is still fighting for a major trade and cooperation deal with the European Union, finalized over two decades ago, but facing rejection, or rather demanding further negotiations from some EU countries, mainly France.

But frustrations aside on the bilateral situation, it has not impeded Brazil, the largest Latin American economy, to take advantage and implement some domestic integration and cohesion measures applicable to its huge territory and resources.

In effect, back in 1995, then president Fernando Henrique Cardoso’s listened and accepted two Brazilian port engineers initiative to introduce the innovative concept of the “Mercosul Atlantic Corridor”. They cautioned that without integrating the North and Northeast regions of Brazil with the main production and consumer hubs in São Paulo, these areas risked attracting US capital in infrastructure, logistics, and industry, diluting Mercosur’s integrative potential.

In response, Fernando Henrique launched the project, initially focused on linking strategic points termed “Integration Round Tables”, both inland and along the coast from north to south Brazil.

This endeavor aimed to interconnect ports like Manaus, Belém, Itaqui, Recife, Salvador, Vitória, Rio de Janeiro, Santos, São Francisco do Sul, Itajaí, and Rio Grande, alongside inland cities such as Cuiabá, Brasília, Belo Horizonte, Curitiba, and Porto Alegre in Rio Grande do Sul, bordering with Argentina and Uruguay..

The “Integration Tables” brought together local stakeholders invested in their regions’ economic growth, including maritime and river ship owners, port operators, transport companies, customs brokers, exporters, importers, and logistics operators. Meeting online every 15 days, they tackled issues hindering intra-Mercosur trade and proposed solutions.

The initiative’s success drew Brazilian government agencies, investment banks, universities, NGOs, and others into the fold. Discussions even arose about exporting the model to Southeast Asia due to operational similarities.

Over time, the “Integration Tables” expanded to Argentina, Paraguay, and Uruguay, involving not just port terminals but also inland cities like Córdoba, Mendoza, Neuquén, and Tierra del Fuego. Post-session minutes were deliberated upon, fostering strategic alliances and contracts.

At the time, Brazil aimed to boost rail transport’s share to 21%, alongside road transport at 63%, while improving fuel efficiency and intra-Mercosur trade.

Given today’s technological advancements and the EU’s reevaluation of Mercosur’s benefits, re-launching this project presents a timely opportunity. It could identify trade obstacles, spur exchanges, and build alliances, benefitting from Itamaraty and Parlasul’s involvement and technology-driven knowledge networks.