Treaty of Asunción

Definition

The Treaty of Asunción is a foundational agreement signed in 1991 that established the Southern Common Market, known as MERCOSUR, promoting regional economic integration among its member states. It aims to foster economic cooperation and trade by eliminating tariffs and other barriers, facilitating the movement of goods, services, and factors of production across borders. This treaty is significant as it laid the groundwork for deeper collaboration among countries in South America, affecting both economic policies and regional dynamics.

5 Must Know Facts For Your Next Test

1. The Treaty of Asunción was signed on March 26, 1991, in Asunción, Paraguay, by Argentina, Brazil, Paraguay, and Uruguay.
2. It marked the official creation of MERCOSUR as a customs union with provisions for the free movement of goods among member states.
3. The treaty also established institutional structures to support cooperation in various areas, including economic policy and social development.
4. Over time, MERCOSUR expanded to include additional member states like Venezuela (currently suspended) and associate members such as Bolivia.
5. The Treaty of Asunción has played a critical role in shaping trade relations within South America and has implications for global trade dynamics involving Latin America.

Review Questions

• How did the Treaty of Asunción influence economic policies among its member states?
  • The Treaty of Asunción significantly influenced economic policies among its member states by establishing a framework for a customs union that promotes free trade. By eliminating tariffs and encouraging the exchange of goods and services, it led to greater economic cooperation among Argentina, Brazil, Paraguay, and Uruguay. This collaboration also pushed member countries to align their economic policies more closely to facilitate trade and investment flows within the region.
• Discuss the broader implications of MERCOSUR's creation under the Treaty of Asunción for regional stability and cooperation in South America.
  • The creation of MERCOSUR under the Treaty of Asunción has broader implications for regional stability and cooperation in South America by fostering closer ties between member states. By promoting economic integration, MERCOSUR helps reduce tensions that might arise from trade disputes or competition. This collaboration not only strengthens economic bonds but also creates a platform for political dialogue and cooperation on various issues such as security and environmental challenges.
• Evaluate how the Treaty of Asunción serves as a stepping stone for future regional integrations or trade agreements beyond MERCOSUR.
  • The Treaty of Asunción serves as a crucial stepping stone for future regional integrations or trade agreements by demonstrating the potential benefits of collective economic action. Its framework has inspired other initiatives such as the Pacific Alliance, highlighting the importance of regional cooperation in addressing global market challenges. By establishing mechanisms for dialogue and collaboration through MERCOSUR, it opens doors for other Latin American countries to consider similar partnerships aimed at enhancing economic growth and political stability across the continent.

Related terms

MERCOSUR: A regional trade bloc in South America that includes Argentina, Brazil, Paraguay, and Uruguay, created to promote free trade and economic integration.

Customs Union: An agreement between countries to eliminate tariffs on goods traded among them while maintaining a common external tariff on imports from non-member countries.

Pacific Alliance: A trade bloc formed in 2011 by Chile, Colombia, Mexico, and Peru aimed at enhancing trade and investment among member countries and promoting greater economic integration with Asia-Pacific markets.