Definition
MERCOSUR (MERCOSUL): The Southern Common Market (Spanish: Mercado Común del Sur, Portuguese: Mercado Comum do Sul), known as MERCOSUR, is a regional trade bloc in South America. Established in 1991 by the Treaty of Asunción and later expanded by the 1994 Treaty of Ouro Preto, it aims to promote free trade and the fluid movement of goods, services, people, and currency among its member countries: Argentina, Brazil, Paraguay, Uruguay, and Venezuela (currently suspended).
Overview
History and Formation: MERCOSUR was formed to promote economic integration, initially starting with the free trade agreement between four nations: Argentina, Brazil, Paraguay, and Uruguay. Venezuela was later admitted as a full member in 2012 but is currently suspended due to political issues. Bolivia is in the process of becoming a full member.
Objectives:
- Eliminate trade barriers between member states
- Harmonize regional economic policies
- Promote sustainable development
- Achieve economic cooperation and integration
- Enhance the competitive capabilities of member economies
Institutions:
- Council of the Common Market: The highest decision-making body
- Common Market Group: The executive body
- Trade Commission: Facilitates trade relations
- Parliament of MERCOSUR (Parlasur): Representing the peoples of the member states.
Examples of Activities
- Free Trade Agreements: MERCOSUR has negotiated and signed multiple trade agreements with countries and organizations, including the European Union, to reduce tariffs and trade barriers.
- Common External Tariff (CET): MERCOSUR countries implement a unified tariff system for external non-member countries.
- Economic Projects: Joint infrastructure projects like the MERCOSUR Highway Network aim to connect member states more effectively.
Frequently Asked Questions (FAQs)
1. What are the official languages of MERCOSUR?
- Spanish and Portuguese are the official languages.
2. How does MERCOSUR impact its member countries’ economies?
- MERCOSUR promotes economic growth through reduced trade barriers, increased foreign investments, and collective bargaining power in international trade.
3. Which countries are currently suspended from MERCOSUR?
- Venezuela is currently suspended from MERCOSUR due to political instability and failure to comply with its membership obligations.
4. Can other nations join MERCOSUR?
- Yes, other South American nations can apply for membership or association status, subject to approval of the existing member countries.
Related Terms
Free Trade Agreement (FTA): An agreement between two or more countries to reduce or eliminate barriers to trade and facilitate the exchange of goods and services.
Economic Integration: The unification of economic policies between different states through the partial or full abolition of tariff and non-tariff restrictions on trade.
Customs Union: A type of trade bloc composed of a free trade area with a common external tariff.
Online References
- Official MERCOSUR Website
- Treaty of Asunción
- World Trade Organization (WTO) - Regional Trade Agreements
Suggested Books for Further Studies
- “The Political Economy of Integration: The Experience of Mercosur” by Jeffrey W. Cason
- “MERCOSUR and the European Union: Exploring the Possibilities for Inter-Regional Trade” by Mario Esteban Carranza
- “Economic Integration in the Americas” by Joseph A. McKinney and H. Stephen Gardner
Fundamentals of MERCOSUR: International Business Basics Quiz
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