Mercosur

Definition

Mercosur, or the Southern Common Market, is a regional trade bloc in South America that was established in 1991 to promote free trade and economic integration among its member countries. The founding members include Argentina, Brazil, Paraguay, and Uruguay, with Venezuela's membership currently suspended. Mercosur aims to facilitate the movement of goods, services, and people across borders, fostering economic cooperation and enhancing regional stability.

5 Must Know Facts For Your Next Test

1. Mercosur was originally established with the Treaty of Asunción in 1991 and later enhanced by the Ouro Preto Protocol in 1994.
2. The organization has expanded to include several associate members, such as Chile, Bolivia, and Peru, which participate in Mercosur's initiatives without full membership rights.
3. Mercosur has faced challenges in recent years due to political changes in member states, economic crises, and disagreements over trade policies.
4. The bloc promotes not only economic integration but also political dialogue and cooperation among its member countries.
5. Mercosur has negotiated trade agreements with other regions, including the European Union, aiming to boost economic ties and facilitate international trade.

Review Questions

• What are the primary goals of Mercosur and how do they relate to economic integration in South America?
  • The primary goals of Mercosur are to promote free trade and facilitate economic integration among its member countries. This is achieved by reducing tariffs, eliminating trade barriers, and allowing for the free movement of goods and services. By fostering economic cooperation among Argentina, Brazil, Paraguay, and Uruguay, Mercosur aims to strengthen regional economies and create a more stable economic environment within South America.
• Discuss the implications of political changes within Mercosur member states on the effectiveness of the organization.
  • Political changes within Mercosur member states can significantly impact the effectiveness of the organization. For instance, shifts towards more protectionist policies or changes in leadership can lead to disagreements over trade policies and weaken cooperative efforts. Recent political turmoil in some member countries has created divisions within the bloc, challenging its ability to present a unified front in negotiations with external partners and slowing down progress on regional integration initiatives.
• Evaluate how Mercosur's relationships with external trading partners influence its role in global trade dynamics.
  • Mercosur's relationships with external trading partners play a crucial role in shaping its position in global trade dynamics. By negotiating trade agreements with powerful economies such as the European Union, Mercosur seeks to enhance its economic influence on the international stage. These agreements can open up new markets for member states' products while allowing them to compete more effectively against larger economies. However, the effectiveness of these agreements often depends on the internal cohesion of Mercosur members and their ability to navigate differing national interests in global negotiations.

Related terms

Free Trade Agreement: An agreement between countries to reduce or eliminate barriers to trade, such as tariffs and quotas, promoting increased trade and economic cooperation.

Customs Union: A type of trade bloc that allows for free trade among member countries while imposing a common external tariff on imports from non-member countries.

Trade Bloc: A group of countries that come together to promote trade and economic cooperation, often by reducing tariffs and other trade barriers.