On May 31, several Presidents of the region met in Brasilia, and at the initiative of the President of Brazil, Luis Ignacio Lula da Silva, they discussed the need to deepen integration between the countries of the region, this time under the umbrella of a renewed UNASUR.
Beyond the opinions that this initiative or another one in particular may arouse, what does seem indisputable is that the levels of regional integration continue to be deficient in this part of the world, which results in low trade exchange between our countries; as well as the existence of multiple integration processes, at a commercial level or more broadly, such as MERCOSUR, the Andean Community, the Central American Integration System (SICA), the Pacific Alliance, and of course ALADI itself.
In this context, it would seem interesting, beyond re-founding or creating new processes, to review the possible convergences between the different blocks, building agendas that allow the objectives that are being pursued to be achieved in the short term.
In particular, in the area of trade facilitation there are numerous initiatives, framed within the WTO Trade Facilitation Agreement, and which in some cases consider rules and obligations that go beyond the multilateral framework, such as a WTO plus. Among these, we can highlight:
- SICA's Central American Trade Facilitation Strategy (1);
- Decision 770 and Resolution 1467 (2) on trade facilitation of the Andean Community;
- The MERCOSUR Trade Facilitation Agreement (3); and
- Chapter V of the Additional Protocol of the Pacific Alliance (4), on Trade Facilitation and Customs Cooperation.
With regard to these last two trade blocs, we would like to comment on some possible developments, which allow us to visualise options for convergence in terms of trade facilitation.
The Action Plan on Trade Facilitation
In July 2018, in Puerto Vallarta, Mexico, within the framework of the XIII Presidential Summit of the Pacific Alliance, the presidents of the bloc (Chile, Colombia, Mexico and Peru) and the presidents and high representatives of Argentina, Brazil, Paraguay and Uruguay (Mercosur), signed a Joint Declaration, the objective of which is to strengthen commercial, economic and social ties between both trading blocs.
Both the Pacific Alliance (PA) and Mercosur are the integration processes with the greatest relative weight in terms of GDP and population in Latin America. Together, these 8 countries represent approximately 81% of the population and 86% of the GDP of the region. In addition, together they account for 89% of exports and 88% of the inflows of Foreign Direct Investment from Latin American and Caribbean countries (5).
It is in this context that the 8 countries signed this Declaration, which sets the bases for a possible Free Trade Framework Agreement between the economies of both blocs. In it, they establish an Action Plan, which aims to monitor and deepen the integration between both Parties, and they identify various areas of joint work, including trade facilitation.
The Action Plan on Trade Facilitation considers the possibility of concluding a Framework Agreement on Trade Facilitation between Mercosur and the Pacific Alliance. The Plan defines a series of actions to be implemented in various areas, among which we can highlight:
- Sharing good practices for the implementation of the AFC (1);
- Exchange experiences and good practices relating to National Trade Facilitation Committees;
- Exchange experiences in the implementation and expansion of risk management systems;
- Promote interoperability of VUCEs;
- Advance the implementation of Authorized Economic Operator (AEO) Programs in the region and promote the establishment of mutual recognition agreements between AEO programs and the respective authorized operators;
- Exchange of information on the operation of OAS programs between AP and Mercosur countries, identifying best practices for promoting their use; and
- Preparation of a Work Plan for the signing of a Mutual Recognition Agreement between AP and Mercosur countries.
We would like to focus on the figure of the OAS and the Mutual Recognition Agreements.
An important milestone in this matter, without prejudice to the numerous bilateral agreements that each of the Members of both blocs have signed in this area, has been marked by the Regional MRA signed by eleven Customs Authorities in May 2019 in Sao Paulo, Brazil.
Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Guatemala, Paraguay, Peru, the Dominican Republic and Uruguay signed one of the most ambitious MRAs in the world, which are currently in the process of implementation. In addition, they have been working on incorporating other government agencies, mainly Agriculture and Health, into the process, following Pillar III of the SAFE Framework, which constitutes an important step in what we call Integrated Border Management.
This step is certainly very important, but along with it, it would be interesting to study and move towards the compatibility of national AEO programs, in terms of their requirements and benefits. Until now, AEO programs, although guided by the provisions of Article 7.7 of the AFC and the WCO SAFE Framework, continue to be constructed, in terms of the types of operators covered, requirements/conditions and benefits, according to the regulations of each country.
The challenge should then be, considering the trade facilitation plan between AP and Mercosur, to explore spaces to harmonize these issues, so that once an MRA is signed, the benefits that an AEO company obtains in one country are not very different from those it would achieve in another; that the requirements that an AEO company must meet in one country are not very different from the conditions it must meet in another country in the blocs.
In this regard, there is still a long way to go, and the first thing to do should be to verify that the ARMs signed, especially the Regional one, are being applied and seeing results in practice.
If we review other aspects contained in the Puerto Vallarta Action Plan, as well as in the other trade facilitation strategies of the other regions, we note the absence of commitments to advance in a series of disciplines that are essential in current times, such as the issue of sanctions and infractions.
Perhaps the principles that the AFC addresses in regard to article 6.3 “Sanctions”, such as the principle of legality (crimes and infractions and their sanctions must be clearly described in the law; there must be no lack of precision or breadth in the description of the types of criminal offenses or infractions); proportionality between infractions and sanctions; absolutely dissociating monetary incentives for control officials or collection objectives from the determination of fines; the possibility of having administrative and judicial resources that are easy to process in order not to discourage claims processes; are issues that the blocs should address in order to generate more harmonized policies on one of the issues that is still the subject of debate in the region. In effect, Colombia has just issued a new sanctioning regime, through Decree No. 920 of 2023, the Government established a new sanctioning regime, confiscation of goods and customs procedures.
In terms of infractions, in particular, the region is indebted to an essential concept in our days, that of “Voluntary Compliance” in Customs, taking into account the WCO Regulatory Framework on Voluntary Compliance (6).
It seems that there is still a conception of a Customs office “focused” on sanctioning, on measuring its performance, and often its collection, rather than applying a large number of sanctions. And in truth it is quite the opposite, Customs should measure by the high degree of compliance that operators give to its regulations, if this were the case, it means that the regulations that Customs dictate have been the subject of a process of consultation and prior discussion (art. 2 of the AFC), that operators have had time to prepare for their application, and that Customs has provided the necessary training so that the application is as efficient as possible. That should be the indicator, not the number of operators who make mistakes in their application.
The promotion and development of voluntary compliance is a more effective way to increase tax collection and create climates of trust and development with the private sector, which are sometimes so scarce in the region. Members of both blocs can address the concept of “voluntary compliance” with a more comprehensive view, sharing international experiences, and changing paradigms that are outdated and burdensome for the administrations themselves. This is an issue that goes beyond the regulatory sphere; it is about breaking stereotypes in the public-private relationship.
Finally, another issue that should be addressed with some urgency in this type of instrument is e-commerce or cross-border electronic commerce. Indeed, in 2021, MERCOSUR signed the “MERCOSUR Agreement on Electronic Commerce”, which establishes a common legal framework to facilitate the development of electronic commerce within the bloc. And the Pacific Alliance addresses the matter in Chapter 13. It is important to note that consumer behavior will continue to deepen this type of trade, as “new consumers” are incorporated and the logistics associated with this type of exchange develops rapidly with the help of platforms and express shipping companies. Therefore, States and Administrations must pay attention to the design of expeditious and secure procedures that guarantee the development of a model that will only increase.
It is urgent to develop more efficient tax collection models and a more harmonised treatment in this area, as well as to design risk management systems adapted to this type of trade.
At this point, it would be pertinent to analyze the possibility of harmonizing legislation on express and postal shipments. It seems clear that the different regulations, categories and exemptions applied in this regime constitute a disincentive for the incorporation, for example, of MSMEs in international trade. Working towards the convergence of existing trade blocs seems to be a viable and more “economical” alternative, based on an agenda that incorporates the new issues of what the Director General of the WTO, Ngozi Okonjo-Iweala, has called the “reglobalization”.
- https://www.sieca.int/?page_id=8020
- https://www.comunidadandina.org/StaticFiles/DocOf/RESO1467.pdf
- https://normas.mercosur.int/simfiles/normativas/75425_DEC_029_2019_ES_Acuerdo%20Facilitacion%20Comercio.pdf
- https://alianzapacifico.net/instrumentos-protocolo-adicional-al-acuerdo-marco-de-la-alianza-del-pacifico/
- https://alianzapacifico.net/alianza-del-pacifico-y-mercosur-definen-plan-de-accion-para-fortalecer-vinculos-entre-los-dos-bloques/
- http://www.wcoomd.org/-/media/wco/public/global/pdf/topics/key-issues/ecp/2015/voluntary_compliance_framework_en_publish.pdf?la=es-ES
Lawyer, Master in International Law from the University of Heidelberg. He worked for almost 20 years in the Chilean Customs, holding various responsibilities. He is an accredited expert of the WCO and is a frequent arbitrator/panelist at the WTO. He is a professor at various universities and the author of various publications on customs and international trade. He is President of the Chilean Institute of International Trade, and is currently Director of Regulatory and Customs Affairs for DHL for Central and South America.
