To that end, Gari charts an ambitious course. Chapter 1 presents the theoretical foundations of his investigations. The chapter first carefully describes the specific object of study and attempting to suggest their unique character (Text 25-30). It then turns to the unique challenges to trade liberalization posed by trade in services (Text 30-38). For that purpose, Gari turns to academic discussion of the term, focusing on the approach of T,P, Hill, developed in 1977 (T.P. Hill, On Goods and Services, 23 Review of Income and Wealth 315 (1977). While the discussion is valuable, it might have profited from a review of the development of the meaning of that term in practice within two useful referents—the European Union and within the North American Free Trade Association area. More importantly, perhaps, the traditional definitions make it easy to too strictly separate trade in services from ree movement of capital and workers and especially of establishment. The emphasis on the temporary nature of the establishment to qualify as services rather than establishment both highlights the important connection between establishment and services (so closely connected perhaps that it is impossible to completely separate them--a subject touched on in chapter 4, though he is well aware of the inconsistencies as a result of this separation-connection problem (Text, 132-133)). But, in fairness, Gari notes this problem when I defined the particularities of the barriers to trade in services (Text at 34, 35, 56). Gari none the less raises the important issue of services as, to some extent, worthy of study independent of other areas to which it might be more or less closely tied.
In what is likely the most important section of this chapter, Gari turns to the description of the spectrum of models available for liberalization of trade in services—one the one end the General Agreement of Trade in Services (GATS) model, and on the other the model offered by the Treaty Establishing the European Community (EC Treaty) (Text 38-54). Though mentioned later in the thesis, the North American Free Trade Agreement (NAFTA) is not discussed further. While understandable, it might have been useful if only as a contrast to spotlight the models actually ittilized. Gari correctly concludes that at the core of modeling liberalization regimes are issues of power. “At the end of the day, the liberalization of trade and, in particular, the liberalization of trade in services, requires a redistribution of regulatory competence over cross border economic transactions between the host State, the home State and regional bodies (legislative and adjudicatory), which admits a wide range of expressions, some more deferential to domestic sovereignty than others.” (Text at 57-58).
From this conceptual framework, Gari begins his exploration of the particulars of MERCOSUR. Chapter 2 presents a highly descriptive treatment of the fairly baroque formal institutional construct that is MERCOSUR, as well as the reality these structures mask. The key point, one perhaps worth making more strongly, is that institutional arrangements are usually critical but not sufficient to support trade liberalization (or any political act for that matter) absent a commitment to translate those ideals and efforts into action. Elaboration is important, implementation is key, and MERCOSUR has apparently mislaid that key. The political background of the basic treaties is discussed first (Text at 60-64). Gari nicely brings out a key element of what is to follow—the political and economic asymmetries among the Member States and their participation in the negotiations leading to the Treaty of Asunción. Id., at 63. The Treaty structure itself is described next as well as its context within the elaborate system of multiple integration treaties to which the MERSOCUR Member States are party (Text at 64-75). The MERCOSUR institutions are treated next (id., at 76-90). Gari paints a picture of a huge and baroque institutional structure, with little substance (as will be made clearer in the succeeding chapters).
The analysis here might have profited by a more direct comparison with its progenitor—the institutions of the EU. This would have strengthened the core argument of the thesis—that MERCOSUR is institutionally at war with itself, an integrationist institutional structure atop a GATS style implementation framework, atop an unstable system of relationships among Member States, atop a group of shifting and competing integration agreements with different casts of state characters. Gari turns next to a consideration of the sources of MERCOSUR law (text 90-99). Gari paints MERCOSUR’s formalist enterprise with skill. The comparisons to GATS, so important to the analysis, follow in Chapters 3 and 4. It is here that one looks through the legal glass darkly. There is much law and little transposition. Enforcement (Text 99-113) looks no better; much smoke and little fire. This is a structure that looks full but may be empty. The chapter ends (Text 113-123) with an interesting discussion of criticisms and proposals for reform. It is here that Gari lays the groundwork for the analytical approach of the last three chapters—an integration effort haunted by past failures, yet bound by them because though inadequate they have never been abandoned (indeed some of them prove to be quite lively), a consequentially weak institutional framework in fact, and the contradictions of high aspirations and weak structures produced in part by the lack of politically feasible alternatives. Here we come across Gari’s contribution to the debate—the call for a specific set of gradualist reforms designed to make the best of a weak situation (text 122-123). It would have been interesting to tease out in a little more detail the political value to the Member States of maintaining this state of affairs—things that “go wrong” might be in the political best interests of one or another group. It maybe that what appears to be deficiencies from a strong integrationist perspective might appear to be the benefits of an agreement designed to slow integration down. MERCOSUR thus looks as much backwards as forwards. It lays a framework for an integrationist future while elaborating that system within the strict confines fo states that are still working toward the sort of trust necessary for more intimate union
With Chapters 3-5 we come to the heart of the analysis—an application of the insights of the first two chapters to the peculiarly nettlesome problems of trade in services. Chapter 3 provides an essentially descriptive analysis of the principal foundations for trade in services integration—the Protocol of Montevideo. (TEXT 125-162). The Protocol’s background (text 125-128), scope (text 128-137), obligations and disciplines (text 137-150), institutional provisions (text 150-154), and annexes (text 154-161) are described. Its focus was on the suitability of the GATS model for integration in trade in services within an integrationist framework that is substantially deeper than GATS. It is clear that Gari suggests that the Protocol of Montevideo is a better GATS, but it is not necessarily a good MERSOCUR.
“The analysis of the black letter of the law reveals blatant contradictions between, on the one hand, a ‘negative integration contract’ primarily concerned with the elimination of discrimination and mindful not to interfere with State Parties’ right to regulate, and, on the other hand, an integration process whose ultimate goal is the establishment of a common market involving amongst other things, the free movement of goods, services and factors of production and the co-ordination of macroeconomic and sectoral policies.
(TEXT at 162). One wonders, however, whether the persistence of this conclusion suggests that the problem may be the way in which an understanding of the objective is approached, rather than a problem with its elaboration. If all but one is marching left, is it fair to argue that the force intended to march right? When Gari considers an expansion of the thesis he might consider the argument that rather than the arbitration cases being right and the elaboration aberrational, perhaps the few arbitration cases that he discusses (principally Argentina-Blocked Highways) may be aberrational instead. That, of course, leads away from integration, but perhaps that is where we are meant to go. What Gari points two as the two great deficiencies of MERCOSUR’s experiences with the implementation of the Protocol of Montevideo—the failure to complete rounds of negotiation and the lack of a sound institutional framework—may be failures only if one means the integrationist project to proceed to a pre determined finale. That, as Gari makes abundantly clear in his analysis, is no longer clear.
Chapter 4 examines negotiation of specific commitments on Trade in Services. (Text 164-198). Gari nicely brings home the extent of the frustration among those who read the Treaty of Asunción as meaning what it said and the Protocol of Montevideo as a concrete step in that direction sanctified by its exposition in the black letter of binding international arrangements. But then that is the problem. This baroque institutional structure is little more than a house of cards built on a windy slope. And the winds, as Gari shows in Chapter 4, tend to blow hard in the trade in services sectors. The framework for elaboration, necessarily complex, is described first (text 164-170). Its reliance on GATS is clearly drawn out; its weakness as a consequence of that reliance becomes apparent given the sustained reminder of the higher purposes of these efforts, and the ways in which the State Parties have cultivated a variety of methods to appear to comply and yet fail to take all the steps necessary to make that compliance so. Gari, in particular mentions a few: the GATS framework lacks a necessary specificity, other alternatives might be better at achieving the State Parties’ stated objectives, and the system is designed to privileged short term interests, the last a fatal problem. (Text 169-170). Gari here looks very briefly if longingly at the European Union, but that reference is not developed. The seven negotiation rounds, from 1998 through 2007, are painfully described (text at 170-180). The pattern quickly emerges—a pattern that might have been more crisply extracted from the descriptive materials to good effect—inconsistent agendas, paralyzing domestic agendas, a failure to commit to any form of compelling supranationalism, and despite all, some small steps forward at different rates among the State Parties. The current state of commitments is then described (text 180-192). Unstated, but important, here, are indirect consequences of this framework. The lack of transparency breeds its own sets of arbitrary activity. The failure to include the non-governmental sector avoids obvious capture but also disengages the populace form the integration process. Certainty and predictability are difficult objectives to attain. There is a sense of State Parties gaming the system—MERCOSUR in general and the Protocol of Montevideo in particular, might serve most usefully as a means of domestic politics by other means than as a means of achieving any sort of deep integration. For all that, Gari finds a silver lining. “A comparison of State Parties’ MERCOSUR commitments with their GASTS commitments clearly illustrates that the former are far more advanced than the latter in terms of coverage, depth and transparency.” (Text at 193). This might say more about GATS than it does about MERCOSUR, but I leave that point to others. For all that, “six rounds of negotiations spanning over the last nine years achieved no more than that (partial) consolidation of the status quo of State Parties’ domestic legal systems, failing miserably to eliminate the discriminatory measures embedded in those systems and ensure a preferential treatment for MERCOSUR services and service suppliers.” (Text at 194). And at last we come to the Achilles heel of any analysis based on the black letter of MERCOSUR: “As things stand today, the observance of the commitments recorded in the schedules depends on a sort of ‘gentlemen agreement’ between the State Parties.” (Text at 194). That gentlemen’s agreement is necessitated by the structural limitations built into the system described well by Gari: (1) little maneuvering room as a consequence of contradictory national legislation or constitutional provisions that appear unchangeable (a case of the tail waging the supranational dog?); (2) valuing concessions is difficult in a system that demands reciprocity; (3) intrusive regulatory asymmetries; (4) prioritization of short term interests as bargaining strategy. (Text 195-196). For all that, there is a bit of bathos at the end of the chapter—“The analysis provided compelling evidence suggesting that barriers to trade in services cannot be removed by diplomatic means alone.” (Text at 196). Stronger medicine is required to meet the objectives, but as Gari correctly points out, medicine not so strong that it kills the patient.
With this in mind, Gari tackles the last and most interesting issues—“the liberalization of trade in services through positive integration.” (Text at 200). The focus is on MERCOSUR secondary rules on specific service sectors and modes of supply. Here Gari means to put “forward suggestions for improving the quality of MERCOSUR legislation.” (Id.). The first section (text 200-203) interrogates the term positive integration. “To put it simply, positive integration refers to the adoption of rules by treaty-based decision making bodies endowed with rule making power.” (Text at 201). But this is the problem. As Gari himself had made clear in Chapters 2-4, the essence of MERCOSUR is the ability of its institutional systems to spin rules which have no effect, and with few real mechanisms at the supra national level to make it so. Still, with the European Union as a sort of North Star, Gari pushes on. He argues that there are many ways to fashion secondary legislation, and many ways to adapt the system to the needs of the multilateral system being created. The EU is an example, but not the limit of its successful use (Text at 202). This is the critical step for Gari to move MERCOSUR form an empty showpiece of good intentions well unrealized to a functioning system of substantial integration in accordance with the tastes of the parties. “By providing a mechanism for tackling the trade restrictive effects caused by ‘lawful’ but disparate domestic regulations, positive integration paves the way for reaching a level of integration deeper than that resulting from the mere removal of overt discriminatory measures.” (Text at 203. The GATS model, then, the basis for integrating trade in services, is not enough. Something more, something more compellingly supra national, is needed. And here is where ‘touch’ makes all the difference. In a political and economic context in which the EU solution is unpalatable, how far can one go to realistically prescribe supra national interventionism in the form of law making from above?
For this purpose, Gari outlines the current process for the adoption of secondary rules (text 203-205), examines the secondary rules adopted to date (text 205-228), and then examines this structure in the trade in services area (text 228-232). In light of the not very surprising paucity of such legislative efforts, Gari offers us a trenchant critique. These include the unfocused objectives of current rulemaking (text at 228-229), the inconsistent pattern of rules (text at 229), the unfocused subject matter of rulemaking (text 229), the tendency to use secondary rules for primary rulemaking which subjects the rules to the usual and cumbersome requirements of transposition into national law (text 229-230), the inadequate implementation of successfully incorporated rules (text 230), and the limited scope of the rules adopted in a variety of critical sectors(text 230-232). From these critiques spring proposals for improving secondary legislation on services (text 232-242). These are meant to parallel the suggestions proposed in Chapter 2.E (on the MERCOSURE framework generally) and are focused on improving the “transparency, accountability and efficiency of the existing legislative process within the boundaries of the predominantly intergovernmental character of MERCOSUR institutional framework.” (Text at 232). These include strengthening regulatory cooperation (text 232-233), a more precise definition of regulatory competence and a reduction of overlap (text 233-234), strengthening an institutional structure for disciplining decisions coming from MERCOSUR legislative or decisional bodies (text 234), and most boldly the institution of a permanent review tribunal (text 235). The last, of course, has strong rule of law arguments going for it, but the proposal is also undercut by the very strong evidence Gari has produced to suggest a political lack of will to go even this far removed from a purely intergovernmental project.
There are more suggestions for improvement. These include strengthening and streamlining the MERCOSUR Secretariat (text 235-36) something that would be useful for integration but dangerous for Member States comfortable with the current inefficiencies. He would also seek to strengthen Parliament’s role. (Text at 236-37), though in light of the length of time it took to implement and the questionable effect of the Europeans Parliament, it is doubtful that a milder form of parliamentary participation might do much. Gari might consider a more focused discussion of Parliamentary control form the perspective of the EU Parliament as he further refines his proposals. Lastly Gari suggests a more refined approach to primary and secondary rulemaking (text at 237-240). But that discussion itself suggests the terribly early stage in which MERCOSUR finds itself. This is no surprise. Given the elaboration of a structure without substance and a system of black letter rules and implementation “understandings,” it makes perfect sense that the Member States might approach the issue of regulation is a less than rigorous way. While this may make the academic shudder, it tends to reflect the reality of the choices actually made by the parties—both with respect to the use of the black letter and the importance of the unwritten substructure that actually impels progress forward (or back).
Now we can step back and see what has come of this examination (text 244-255). “The liberalization of trade in services is a complex task. Unlike tariffs or quotas, barriers to this type of trade are essentially regulatory in character, and thus, less obvious and more dispersed. (Text at 244). This certainly has been the experience within the European Union. It has yet to occur within GATS, the model adopted in great part by MERCOSUR. As such, the liberalisation of trade in services trends to call for the highest degree of integration. At a minimum it requires a high degree of legal harmonization among the legal orders of the participating states and a sense that, at least in the aggregate, there are symmetries of benefit and obligation. None of this is the case within MERCOSUR, which Gari characterizes, after 18 years in existence as “an incomplete free trade area, with a partially implemented common external tariff and no co-ordination of macroeconomic policies.” (Text at 245). One is left to wonder, as Gari does, whether, because of the asymmetries and lack of will, the Member States actually want more than MERCOSUR than they have put in: a nice aspirational framework, like an empty house, in which eventually, if it suits them, the parties will lodge themselves. This becomes clear when considering the differences in approach between Brazil and Argentina, on the one hand, and the other Member States. (Text 250).
The keys to reducing these deficiencies are complex. Gari points to the need for revision of both legal framework and the culture of implementation elaborated to date. Or, at least, with respect to key instruments, like the Protocol of Montevideo, a willingness to interpret around inefficiencies: “it is also fair to say that the Protocol’s general obligations and disciplines are broadly defined and thus, if properly enforced, could still make a valuable contribution to the liberalisation of trade in services.” (Text 246). But other aspects of the legal framework are also weak: dispute settlement is formally inadequate and little used in practice (text 248).
The culture of implementation is also maddeningly obtuse, from an integrationist perspective. The negotiation rounds are a hard nut to crack. These require both an assertion of a political will that seems to be lacking and the creation of a bureaucratic corps dedicated, like that of the European Union’s Directorate in Brussels, to the cause of integration. (Text 246-47). I am less optimistic about this. It is as likely that the Member States approach the rounds as they do because it suits them. The issue may be more about creating a context in which it suits them to change. Yet, to some extent Gari has a point: a core of bureaucrats dedicated to harmonization may prove useful in changing context. The same problems bedevil the project of secondary legislation. (Text at 247). But most potent is the great rift between even the small production of rules and decisions within MERCOSUR and their transposition into the national legal orders of the Member States (Text at 248). It is a strong sensitivity to these realities that guides Gari to his proposals—gradualist, and incrementalist, that he then suggests.
From out of the construction of a framework for analyzing liberalization regimes, Gari suggests the failings of MERSOCUR. That, of course, is easy enough to do in this case. What makes the argument much more compelling is his attempt to suggest a strong positive, both from the framework chosen for integration within the MERCOSUR model and the possibilities he correctly suggests for succeeding in a gradualist and flexible long term program of liberalisation, even in the face of great asymmetries of political and economic power. Gari concludes that, to date, there has been very little real progress toward integration (Text at 245). The Protocol of Montevideo on Trade in Services “does not provide the ideal regulatory framework for trade in services within the bloc.” (Id.). GATS provides a poor model, he concludes further, when the objective sounds more like the integrationist goal of multilateral amalgamations like the European Union. (Id., at 246-247). Yet he suggests that the institutions are not at fault (id., at 248), it is merely symptomatic “of the economic and political factors underlying the integration process.” (Id., at 249). The solution is neither to abandon the current institutional framework nor to abandon the project of integration. Instead, Gari proposes a series of gradualist reforms he suggests might help foster, in the long term, the integrationist ideals of the Treaty of Asunción and the Protocol of Montevideo for trade in services. These consist of consolidating the status quo (Text at 252), efforts at convergence of the legal systems of the Member States (id., at 252-253) an effort that has proven difficult even in more ambitiously integrationist regimes like that of the EU, and the promotion of a more open debate on integration (id., at 253-255). “MERCOSUR will require far more than the ten years period prescribed by Article XIX of the Protocol of Montevideo before suppliers and consumers of services can move freely across national borders. And still, it is not unreasonable to wonder if this objective could ever be achieved at all.” (Id., at 255). After reading Gari’s thesis, one would have to agree.
But for all of that, Gari's suggestions are worth careful consideration. After all, MERCOSUR has not been abandoned. The reverse is more faithful to the fundamental truth of relations among the Member States of MERCOSUR. And that trade organization is young, even when measured by reference to the European Union. Most potent, I think, of Gari's suggestions, and one that I hope will be further elaborated in future work, is the empowerment of an invigorated Secretariat. One of the great problems of MERCOSUR is that it has developed no independent voice in the debates about integration. There is no analogue to the European Commission, even in its infant form in the 1960s. Instituting and funding an organization whose principal loyalties are to the fundamental objectives of MERCOSUR, with independent power to investigate and to published reports, available to all--green papers, white papers, proposals, resolutions and the like, will help reorient the debate about integration in the Southern Cone in a way that is impossible now.