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Argentina’s Milei, the new president, is contemplating a South American Brexit: the prospect of withdrawing from the continent’s common market.

Javier Milei, elected as Argentina’s new president on November 19, has pledged to exit the South American “common market,” Mercosur. This decision could bear significant economic and social implications for Argentina, reminiscent of the UK’s departure from the EU. Mercosur shares certain features with the EU, granting nationals from nine South American countries (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Peru, Paraguay, and Uruguay) the right to enter, reside, and work across these nations.

These rights are codified in the Mercosur Residence Agreements, adopted in 2002 and enacted in 2009. From 2009 to 2021, over 3.6 million South Americans obtained residence permits through these agreements, as reported by the International Organization for Migration.

Argentina played a pivotal role in shaping these agreements, stemming from an Argentine proposal to establish a lasting mechanism for citizens of Mercosur countries to access legal residence in other nations. Over the past two decades, Argentina has been a frontrunner in regional migration policy.

Its migration law of 2004, lauded by the UN as exemplary, has wielded substantial influence over migration legislation in neighboring countries.

Mercosur, founded in 1991, boasts full or associate member status for every country in the region. The organization aims to enhance economic and trade integration among its members, foster collaboration on social policies, and act as a unified platform for global geopolitics, forging a shared approach to various international matters, including migration and trade.

Furthermore, Mercosur and the EU have engaged in lengthy negotiations for a trade agreement. However, the status of its ratification remains uncertain.

Why the decision to withdraw? In this context, it is essential to delve into the reasons behind Milei’s proposal to exit Mercosur, examining potential ramifications and the requisite procedure.

Milei, an avowed anarcho-capitalist libertarian advocating for minimal state intervention and the adoption of the US dollar as Argentina’s currency, has called for Argentina to withdraw from international and intergovernmental organizations. This encompasses the Brics (Brazil, Russia, India, China, and South Africa) community, which invited Argentina to join by 2024, and the Union of South American Nations (Unasur), rejoined in 2023.

According to Milei, both the state and supranational/regional organizations should refrain from interfering with free trade. Consequently, he perceives Mercosur as an impediment.

Should Argentina proceed with withdrawal, it would confront three notable challenges. Firstly, Mercosur has provided regional stability and a platform for Argentina to articulate its ideas, interests, and demands globally. Exiting the organization would thus diminish Argentina’s capacity to address shared regional and global challenges, leading to isolation from the broader region and the international community.

Secondly, the functioning of earlier mentioned residence agreements could be impacted, complicating the ability of Argentinians to work in other South American countries and vice versa. Notably, approximately 80% of migrants to Argentina originate from other parts of South America. Additionally, over 300,000 Argentinians reside in other South American countries, and their rights could be jeopardized by such a decision.

Ultimately, Article 21 of the 1991 founding treaty of Mercosur mandates that any state wishing to exit the agreement must formally notify the other member states 60 days before departure. Additionally, Argentina’s constitution stipulates that an absolute majority vote in both the Congress and Senate is required for such a move.

It is essential to note that the president-elect’s party and allies lack even a simple majority in either chamber, the deputies, and the Senate. Nevertheless, the president possesses the legal authority to circumvent Congress on various issues by issuing executive decrees.

In the aftermath of the election, Milei and his newly appointed ministers moderated some of the more radical proposals in their agenda. For instance, the designated Minister of Foreign Affairs, Diana Mondino, recently affirmed that Argentina “will not obstruct the Mercosur-EU Agreement” and will maintain favorable relations with Brazil, Argentina’s primary trade partner and the most substantial economy in South America. However, Mondino has clarified that Argentina will not join the Brics.

This indicates that Milei might need to temper his more radical ideas in alignment with political and legal realities. Evidently, these proposals were crafted to resonate with an electorate discontented with the previous government’s economic mismanagement and the ongoing economic crisis.

The remainder of South America will closely observe the political developments in a country that continues to lead regional agendas on global issues like climate change and migration, anticipating the direction it will take.

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