International co-operation in Mercosur :
Is the “third pillar” more advanced than the “first pillar”?
José Antonio F. Lopes de Lima – Doctorant at Sorbonne University
Mercosur[1] – the Southern Common Market - is a regional bloc in South America whose States Members are Brazil, Argentina, Paraguay, Uruguay and now Venezuela (since 4th July 2006)[2]. This bloc aims to build a common market, using the European Community as its model. We could roughly compare this South-American organisation with the beginning of the EEC (European Economic Community), with its six original Members: Germany, France, Italy, Luxembourg, Netherlands and Belgium. If now (from 1st January 2007) we have an European Union with 27 Member States (including Romania and Bulgaria), the future of the Mercosur will be to attract other South America States, in order to develop the South America Community of Nations[3].
In spite of all economic, political and social problems that hamper the progress of the Mercosur, this bloc has evolved and is trying to extend its influence to some areas beyond the economic/commercial market project. As fas as this paper is concerned, we would like to present some Mercosur’s rules and activities related to the international co-operation among the Mercosur States Members – administrative, police and judicial co-operation. In addition, we would like to raise this question: has the Mercosur “third pillar” (home and justice affairs) progressed more than its “first pillar” (common market and common policies)?[4].
The main objective of this paper is to try to analyse some progress related to international co-operation in Mercosur. Nevertheless, it is important to briefly present some basic characteristics of the Mercosur organisation: its origin, its institutional structure, the legal character/force of Mercosur law, the arbitration clause, the incorporation of Mercosur law within the State parties, the harmonisation system within Mercosur and finally international co-operation within Mercosur.
I – The origin of Mercosur[5]
Negociations between Brazil and Argentina (after years of common military dictatorship) concerning regional community integration resulted in the 1991 Treaty of Asuncion creating the Mercosur. Uruguay and Paraguay also acceded to this Treaty. Bolivia and Chile became associated members and finally, Venezuela became a full member in 2006. Mercosur has an intergovernmental structure and institutions based on an international treaty. It has objectives similar to those of the European Community: the realisation of a customs union and a common market. Thus, the Mercosur is a regional bloc that goes beyond free trade associations, like Nafta (North American free trade zone, composed of USA, Canada and Mexico)[6].
The realisation of a common market is set out in the Treaty of Asuncion (art 1). It involves matters such as the customs union, the four freedoms, the coordination of common policies (like agriculture and industry), fiscal and monetary coordination and foreign trade. Harmonisation of the national legislation can be considered as a crucial means of Mercosur strategy, in order to develop the regional integration (Treaty of Asuncion, art 1). The four founding States had tried to bring about the common market until 1994 but this target was not achieved. Until now (2006) there are some protective commercial rules that hamper the conclusion of the common market objective.
In fifteen years, the Mercosur organisation has progressed considerably, but it is still too far from its European reference. It is hoped that it does not need the same fifty years to achieve the level of development of the European Union.
II – The institutional structure of Mercosur[7]
The structure of the Mercosur cannot be easily compared with the structure of the European Community/Union[8]. The institutional structure of Mercosur has two legal foundations: The Treaty of Asuncion (art 18) and The 1994 Protocol of Ouro Preto (POP). Article 3 POP prescribes that the Conselho do Mercado Comum (CMC) is the main organ of this organisation. It consists of the Meetings between the Heads of State and also of the Ministers for Foreign Affairs and the Economy. This organ could be considered something between the European Council and the Ministers Council in the European Union system. The CMC gives the main direction and chooses the main policies and strategies adopted by the bloc. The Grupo do Mercado Comum (GMC) is the executive branch of Mercosur (POP, article 10). It runs all working groups concerning such areas as agriculture, environment, finance, education, research, etc. In contrast to the European Commission, the GMC has no permanent basis in the territory of one of the States parties. Furthermore, the GMC has no right of legislation initiative. Besides these two main Mercosur institutions, we have the Commerce Commission of Mercosur (CCM), which is specialised in commercial/economic issues, such as competition, procurement, customs and consumer protection. In December 2006 a new institution will be created – the Mercosur Parliament – having the Commissao Parlamentar do Mercosul (CPC) as your origin[9].
The Parliament has to improve the harmonisation and implementation of the Mercosul rules in the National States. It also has to give more transparency to the political decisions of the bloc. The formation of the Parliament represents a huge advance in regional integration. This new institution will reduce the “democratic deficit”[10] in Mercosur, a phenomenon so criticised in the European Union system. However, the hypothetical immediate application of the European co-decision procedure between European Parliament and Council to the Mercosur decision making process is completely unthinkable. Nevertheless it is clear that the Mercosur Council will pay more attention to the opinion of the Mercosur Parliament.
It is worth noting that the only institution of Mercosur which has a permanent basis is the Administrative Secretariat (SAM), situated in Montevideo. They give technical and administrative support for the other institutions and they are responsible for the archive of the Mercosur. They have neither executive nor legislative initiative power and thus they cannot be compared with the European Commission based in Brussels.
Considering the different types of rules set out by Mercosur institutions, the primary Mercosur law consists of the Treaty of Asuncion and the successive Protocols (mainly Ouro Preto, Brasilia and Olivos). The secondary Mercosur law consists of CMC decisions, GMC resolutions, and CCM directives (POP, articles 41 et 42). The Members States must comply with these rules. The right of legislative initiative is a monopoly of the States, which may submit proposals to the CMC, GMC or CCM.
III – The legal character/effect of Mercosur law[11]
There is no doubt that the main characteristic of Mercosur is a regional organisation with intergovernmental structure (Tratado de Asuncion, chapter II). The four founding States did not choose a supranational organisation and indeed they are very jealous and protective of their respective sovereignties. Thus, until this moment there is no executive, legislative or judiciary supranational institution in Mercosur. Nevertheless, it is worth noting that Mercosur does posses legal personality (POP article 34), enabling the Conselho do Mercado Comum to conclude treaties on its behalf[12].
One of the most important differences between European Community and Mercosur is that the latter’s legislation has no supremacy in relation to national law (except in Argentina). However, the Protocol of Ouro Preto sets out various obligations for the States (articles 38 and 42). The decisions of the CMC, the resolutions of the GMC and the directives of the CCM are all binding on the States. All decisions are taken unanimously (POP, article 37). Thus, there is no possibility to decide by qualified majority vote (QMV). The legal instruments of Mercosur have no direct effect and so they are not an automatic source of rights and duties for the subjects of Mercosur. According to 42 POP, all States are under the obligation to incorporate in domestic law binding Mercosur decisions (decisions concerning the internal organisational structure of Mercosur do not need be incorporated). The States have to be loyal to Mercosur (POP, article 38) and the incorporation law follows the internal (constitutional) procedures of every State. All States that ratify and incorporate Mercosul norms have to notify the SAM; after the final notification the SAM informs the States within 30 days of which the rules in question will simultaneosly enter into force in all States parties.
Constitutional national provisions can facilitate or hamper the implementation of the Mercosur primary and secondary rules. For instance, whereas the Argentinian Constitution – interpreted by the Argentinian Supreme Court – states the supremacy of the Mercosur law in relation to national law[13], Brazilian Constitution considers that treaties and international norms fall under the Brazilian Constitutional order and they have just the same weight of the ordinary laws[14]. Therefore, if a Mercosur rule conflicts with the Brazilian Constitutional order, the Brazilian Supreme Court must dismiss the Mercosur rule[15]. Having these realities in mind, it is not difficult to understand why the implementation and application of Mercosur law in domestic laws is so complicated. Until now less than 50% of the unanimous decisions of Mercosur have been effectively incorporated by all States as parties and have therefore entered into force[16]. There is only one way to have the Mercosur rules implemented by the States parties: through political negotiations. As we have already said, there are no supranational Mercosur institutions charged with the task to control the compliance with Mercosur rules and there is no Mercosur Court of Justice where the States or the regional institutions could have recourse in order to enforce such compliance. Far from that, the only structure in place to solve conflicts/controversies is an arbitration mechanism which has been provided to deal with primarily commercial disputes between the States. This experience should be considered with a long term perspective as the embryo of a Mercosur Court of Justice, but this remains just a possibility,.
IV- The arbitration mechanism in Mercosur[17]
Mercosur arbitration has the 1991 Protocol of Brasilia and the Protocol of Ouro Preto as legal basis. This is an intergovernmental arbitration system just open to Member States. The matters subjected to the arbitration panel concern the interpretation, application or non-fulfilment of Mercosur primary and secondary law. In the case of conflicts involving these matters, the Members States have to pass through two stages: direct negotiations and mediation by the Grupo Mercado Comum (GMC). If the dispute is not settled by political negotiations, any of the States can have recourse to arbitration. In such cases an ad hoc tribunal is established as an arbiter, which decides on the basis of Mercosur law and any international law that is applicable to the matter. The award is binding on the States parties to the dispute.
In 2002 the Protocol of Brasilia was supplemented by the Protocol of Olivos[18]. After ratification by all the States parties the Protocol of Olivos has replaced the Protocol of Brasilia in new cases. The main differences between the old and new arbitration systems are: a) the second stage of the procedure, mediation by the GMC, has become optional; b) the ad hoc arbitration tribunal may impose provisional measures; c) appellate proceedings are provided before a Permanent Court of Appeals; d) the measures of compensation which may be imposed by the complaining party in the case of the other party’s non-compliance with the arbitral award are regulated much more strictly; and e) a complaints procedure is provided for the party complained against, before the ad hoc tribunal or the permanent court, if this party is of the opinion that it is in fact complying with the award. It is worth noting that this arbitration mechanism is not used very often and the lack of a real supranational jurisdiction in Mercosur can be considered one of the main weaknesses of this regional system[19].
V- The incorporation of Mercosur law in domestic law
One of the most serious flaws of the Mercosur legal system is that the States parties fail to incorporate many binding decisions, and consequently these rules are unable to create rights and obligations for the legal subjects. However, even if a certain Mercosur rule has not been incorporated by all Members States and has therefore failed to enter into force, the legal instrument is still binding and the parties are not permitted to take measures which are contrary to the text of the instrument. This binding character can be inferred from the principle of loyalty to Mercosur and the duty to incorporate its legislation. Thus, it can be stated that the binding character is absolute between the States and they cannot undermine this binding principle by not incorporating the Mercosur rule. It is hoped that with the mise en place of the Mercosur Parliament in December 2006, this problem will be reduced because one of the main tasks of this new institution will be the improvement and control of the incorporation of the Mercosur law into the legal system of the Members States. They will work with the Executive and mainly with the National Parliaments in order to facilitate the implementation legal mechanisme.
VI- Harmonisation system within Mercosur[20]
Legal harmonisation is a subject which engenders fierce debate among proponents and adversaries. In the European Union, for instance, the debate about harmonisation of criminal law has gathered momentum by the EU Treaty of Amsterdam, which squarely addresses the harmonisation issue. Article 31 of the Treaty urges the Member States to approximate their criminal law provisions with a view to improving the mutual co-operation in criminal affairs[21]. As far as the Mercosur is concerned, the Treaty of Asuncion (article 1) states that the organisation of a common market implies the harmonisation of the domestic legislation of the States parties. The Commissão Parlamentar do Mercosul (basis of the future Mercosul Parliament) has an advisory function in the field of harmonisation but we should consider that this role has not been successful[22]. It is worth presenting an example of an important harmonisation measure that lacks effectiveness because Mercosur legislation is not always incorporated into the Members States systems. In 1994 a Customs Code was adopted. This Code contains provisions on substantive and procedural customs law. The Code also provides for customs enforcement, including customs penalties. Title IX - concerning customs infringements - harmonises in detail the infrigements of smuggling, fraud and false customs declarations. Compliance with general principles of law, such as the ne bis in idem rule, is also prescribed. Finally, the applicable penalties are provided. These concern reparatory and punitive administrative sanctions, to be imposed by the national customs authorities. Among those mentioned are fines, the confiscation of goods and means of transport, and the suspension or withdrawal of licences. The penalties are not linked to specific infringements, nor is their severity further defined. It is up to the national authorities to make the penalties function. Unfortunately, the Mercosur Customs Code has not yet entered into force due to a lack of ratification and incorporation of the Code into the national legal system. This has prevented the realisation of substantive customs harmonisation.