Author Archives: Ana Julia Possamai

About Ana Julia Possamai

Pesquisadora em Ciência Política da FEE. Political Science Researcher at the FEE.

Digital integration: the technological dimension of Mercosur

The Southern Common Market (Mercosur) is about to celebrate its 25th anniversary next year. In addition to a Common External Tariff (CET), a common market requires the free movement of not only goods and services, but also of factors of production (capital and labor force). This regional integration stage would make the boundaries between its members virtually non-existent in terms of trade and population mobility.

The main issue is how to make this reality possible, given the variety of documents (physical, electronic and digital) that intervene in the analysis and clearance of imports, exports and migration. Besides the numerous bureaucratic steps, communication between public and private agencies is troublesome due to the diversity of technological, semantic and organizational formats that sustain the information systems of the parties involved. The convention of common models and technological standards imposes itself as a challenge to the interconnection and interoperability of these systems. They are vital to make possible a fluid, efficient and safe circulation between the Mercosur countries. Thus, the so-called digital integration emerges as a fundamental tool to make the current stage of customs unity advance and reach the Mercosur telos.

The need to harmonize positions and narrow the technological gap between its members has always been part of the Mercosur’s agenda, leading to the creation of the Specialized Meeting on Science and Technology (RECyT) in 1992. However, the creation of a common legal and technological milestone came on the agenda only between 1998 and 2000, as part of the discussions on e-commerce carried out by the new Working Subgroup No. 13 (SGT-13).

The electronic trade is a symbol of the new Digital Economy. According to the Ecommerce Foundation, the industry generated US$33.2 billion in Latin America and the Caribbean in 2013 — which corresponded to nearly 0.57% of the Gross Domestic Product (GDP) of the region and 3.2% of all products and traded services in the economy. Brazil alone responded for US$18.5 billion, an amount equivalent to 0.62% of the national GDP. Despite the growth in the traded value, the region lags behind in comparison with the world average. The sector generated 1.56% of the world GDP in 2013, and the average online consumption was US$1,304 per customer — more than twice as much as the Latin American average, of US$630. Regarding cross-border e-commerce, the majority of the goods and services purchased that year came from the United States and China. There is no hard data on how much is transacted online between the Mercosur countries. The general perception is that the volume is very low, despite having the potential to be expanded.

This perception prompted the creation of Digital Mercosur, a project to support Mercosur Information Society, in partnership with the European Commission. Digital Mercosur has finally given clearer outlines to the digital integration in the region. Between 2008 and 2013, it sought to strengthen competences and increase knowledge of the potentialities of the Information and Communication Technologies (ICTs) in intra- and extra-bloc trade. For that purpose, distance learning courses have been promoted in the Virtual School of Mercosur (EVM). In addition, the project aimed at reducing legal and technological asymmetries between the bloc’s members. To this end, it sought to establish a regulatory framework on data protection, electronic invoicing and digital certificates, aiming at providing security and legal validity for the agreements and documents signed in digital form. The ultimate goal was to enable faster and more reliable transactions, in order to improve the production and trade integration and expand the market horizons to small and medium-sized local businesses.

In fact, Digital Mercosur has succeeded in establishing a technological and legal model of integration of the public key infrastructure (PKI) and digital signatures recognition, embodied in the Digital Certification Action Plan for Mercosur. Moreover, Uruguay and Argentina have started to use the timestamp, which validates the date and time of day when a digital document is signed and allows, for example, issuing electronic invoices. In Paraguay, the Root Certificate Authority and its respective PKI have been implemented, providing legal validity to digital signatures. In both cases, the technology incorporated was the already existing Brazilian one, which was made available to the member states by means of cooperation. However, the project failed to carry on with the development of a political and institutional framework for the security and protection of personal data. Moreover, it was not able to develop the desired online platform for the sale of goods and services of micro, small and medium-sized businesses and to create logistics centers for the integrated delivery of goods (e-logistics hubs).

Besides e-commerce, digital integration also allows the realization of fully digital public services and processes towards the construction of a true e-government in the region. The e-government enables faster transactions, ensures greater reliability and prevents fraud. In this sense, in 2004 the Indira System (Customs Records Information Exchange) was implemented, in line with the current stage of customs union in Mercosur. The system is provided by the Brazilian Federal Data Processing Service (Serpro). It interconnects the member states’ customs management systems to allow the timely consultation on import and export information and documentation that support the dispatching procedures. A step forward would be the interconnection of customs and migration supervision platforms. This could enable, for example, the so-called Integrated Customs of Mercosur, a constant demand from tax inspectors to speed up the release process of cargo and people flows.

Regarding the movement of people, there is an ongoing process to implement a common vehicle license plate of Mercosur, which will reach a fleet of more than 110 million vehicles in Brazil, Uruguay, Paraguay, Argentina, and Venezuela. The new license plate has several security features in order to facilitate the electronic supervision of vehicles in highways, hinder the cloning of plates and enable a more accurate control of private cars and the transportation of cargo and passengers. The future integration and communication of this system will facilitate access to information on ownership, model, manufacture and vehicle type, along with information about robberies and thefts. A potential application of the solution lies, for instance, in cross-boundaries police cooperation to investigate cases of stolen vehicles which trespass the Brazilian border into illegal dismantling in Paraguay. In this sense, the solution can also contribute to the functioning of the already existing Mercosur’s Security Information Exchange System (Sisme), through which data on criminals, car thefts, missing persons, among others, are shared. Implemented in 2005, Sisme is responsible for the security dimension of regional integration, particularly the fight against organized crime, cross-border crime, smuggling and intra-bloc crime in general. Currently, there is a negotiation process to expand its scope to community policing issues, cybercrime, environmental policing and drug trafficking.

Despite these initiatives, however, electronic governments of the member states require further development. According to the e-Government Development Index[1], countries in the region still have a poor telecommunication infrastructure, especially due to a low penetration of broadband Internet (wireline and wireless). Except for Uruguay and Argentina, they rate poorly in terms of education indicators (human capital), and most of their electronic services have a low level of maturity. This situation undoubtedly imposes barriers to the achievement of a better communication and interaction between governments, society and companies in Mercosur. The aforementioned absence of a security and data protection institutional framework worsens these difficulties.

In the light of the above considerations, digital integration must be seen as critical to reducing transaction and communication costs between the Mercosur countries and as instrumental for the fulfillment of the Southern Common Market’s goals — either in its business scope or in relation to population mobility and security. The adoption of security and data protection regulatory frameworks and the implementation of harmonic measures for expanding the penetration of ICT infrastructure in the region are also essential. Without a special attention devoted to these subjects, the desired flow of goods, services, capital and people will be constantly hampered by departmentalized and rigid bureaucratic processes which are not consistent with the network reality of the Digital Age.

[1] This index is published biannually by the United Nations Public Administration Network (UNPAN) in the Global E-Government Survey. It evaluates comparatively countries in three main areas: electronic services, telecommunication infrastructure and human capital.