During the visit to Argentina of the President of Brazil, Jair Bolsonaro, the interest in focusing on the possibility of implementing a single currency for MERCOSUR was announced.
Given this momentous advance and without prejudice to the positive aspects as well as the difficulties that its implementation may generate, a question should be asked as a first step: What type of integration is MERCOSUR?
When the Treaty of Asunción was signed in 1991 between Brazil, Argentina, Uruguay and Paraguay, each of the States Parties defined the creation of a COMMON MARKET, for which, among other fundamental characteristics, is that of being united in terms of customs, forming a common customs territory with all that this implies.
Customs union
The General Agreement on Tariffs and Trade (GATT), in its Article XXIV, paragraph 8, states: “A customs union shall be understood as the substitution of two or more customs territories by a single territory.” Its members eliminate customs duties and other trade restrictions for the essential part of the exchange of products originating within the zone, and that the duties and other regulations applied by the Member States in their trade with actors outside the zone shall be substantially identical..
In the case of the Treaty of the European Community, it states that “Customs Union” covers all trade in goods and that it will implement the prohibition among Member States of import and export customs duties, as well as the adoption of a common external tariff in their relations with third countries. In short, duties and other restrictions on intra-zone trade on products originating in the entire single customs area are eliminated, as well as those from extra-zone countries that have fulfilled their obligations.
Although a “Customs Union” is not necessarily a “Common Market”, the latter, i.e. a Common Market, must always be a Customs Union.
Mercosur Treaty
Now, the Treaty for the Establishment of a Common Market between the Argentine Republic, the Federative Republic of Brazil, the Republic of Paraguay and the Oriental Republic of Uruguay, called the "Treaty of Asunción" (art. 23 of the Treaty), approved by law 23.981, is an agreement in the terms of article 2, inc. 1, section a, of the Vienna Convention on the Law of Treaties, that is, an international agreement concluded in writing between states and governed by international law, and which, therefore, is part of the legal system of the Nation with supralegal rank (arts. 31 and 75, incs. 22 and 24, of the National Constitution (according to the CSJN ruling of 11.12.2014 (Whirpool Puntana SA vs. General Directorate of Customs)
In this sense, the CSJN has pointed out that "through this instrument, the member states, after pointing out that the expansion of the current dimensions of their national markets, through integration, constitutes a fundamental condition to accelerate their processes of economic development with social justice, agreed to establish "a Common Market" called the "Southern Common Market" ("MERCOSUR"), which should have been established by December 31, 1994, (Article 1, first paragraph, of the Treaty). That same article stated that this implied "the free movement of goods, services and productive factors between countries, through, among others, the elimination of customs duties and non-tariff restrictions on the movement of goods and any other equivalent measure." And also the "establishment of a common external tariff and the adoption of a common trade policy with respect to third States or groups of States; and the coordination of positions in regional and international economic and commercial forums." Likewise, the cited article 1 indicates as implications of the aforementioned common market the "coordination of macroeconomic and sectoral policies between the States Parties: foreign trade, agriculture, industry, fiscal, monetary, exchange and capital, services, customs, transportation and communications and others that are agreed upon, in order to ensure adequate conditions of competition between the States Parties", and the commitment of these to "harmonize their legislation in the pertinent areas, to achieve the strengthening of the integration process". (CAccording to the CSJN ruling of 11.12.2014, Whirpool Puntana SA vs. General Directorate of Customs)
Imperfect Customs Union
Despite the guidelines that emerge from the Treaty of Asunción, expressed by the Supreme Court of Justice of the Argentine Republic, we currently find ourselves with a Common Market that does not really have a “perfect customs union.” This can be seen by the mere observation of flaws that have occurred over all these years and some of which still persist.
It is enough to recall the imposition of a 10% “statistical rate” that Argentina imposed on all imports, even within the zone, in the 90s. Furthermore, with Resolution 11 of 2002, a tax (retention) was implemented on the entire universe of extractions of goods that were carried out from Argentina and currently with decrees 793/18 and 1201/18, taxing all exports with “export duties”, without any exception for those destined for MERCOSUR.
Undoubtedly, this observance shows that there are priority measures of uniformity of legal criteria that must be established before assuming weights such as that of a monetary unit, which without a doubt, although it has possibly been positive for the European Community, certainly such an area has not only been constituted as a clear Customs Union, to become a Common Market and finally an Economic Community, with all that this implies, respecting the scheme of what the integration means agreed between the Member States.
Conclusion
The Supreme Court of Justice of the Republic of Argentina, in order to decide whether or not it was appropriate to apply export duties to intra-zone operations, made a comparison of the constitutive framework of MERCOSUR with that of the EUROPEAN UNION, stating: “In this regard, one cannot fail to notice the difference between the Treaty of Asunción and the Treaty by which the European Economic Community was established (Treaty of Rome of 1957), since the latter expressly provided for the prohibition among Member States of “quantitative restrictions on exports, as well as all measures of equivalent effect” and obliged them to eliminate those that existed upon the entry into force of this Treaty “at the latest, at the end of the first stage” (art. 34). As can be seen from the above, the Treaty of Asunción did not include a clause equivalent to that adopted by the European Community” (according to the CSJN ruling of 11.12.2014 (Whirpool Puntana SA vs. General Directorate of Customs) and decided to consider the possible application of withholdings within MERCOSUR, even though it is claimed that we are dealing with a Common Market with its character as a Customs Union.
This leads us to conclude that before attempting measures appropriate to a Community such as the European Economic Community, we must note that we are still unable to consider MERCOSUR as a proper Customs Union; ergo, a Common Market with the possibility of carrying out actions such as “monetary unity”. This will only be possible once criteria are standardized regarding what MERCOSUR is and put into practice with the same criteria among the Member States, respecting the essence of a process of commercial integration, which has its bases in tax and customs matters.
By: Dr. Guillermo Felipe Coronel, Member of the Institute of Customs Law and International Trade of the Argentine Association of Constitutional Justice
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