Mercosur

Definition

Mercosur, or the Southern Common Market, is a regional trade bloc in South America established in 1991 that aims to promote free trade and economic integration among its member countries. The bloc primarily consists of Argentina, Brazil, Paraguay, and Uruguay, with Venezuela's membership currently suspended. Mercosur facilitates the movement of goods, services, and factors of production among its members, enhancing regional economic cooperation and contributing to the overall economic environment in South America.

5 Must Know Facts For Your Next Test

1. Mercosur was established by the Treaty of Asunción in 1991 and later strengthened by the Protocol of Ouro Preto in 1994.
2. In addition to its full members, Mercosur also includes several associate members and has agreements with other countries and regional blocs worldwide.
3. The bloc aims to create a common market by eliminating tariffs on intra-regional trade and coordinating economic policies among member states.
4. Mercosur has faced challenges such as political differences among member countries and external pressures from global trade agreements.
5. The organization also promotes social and cultural integration among its member states, working towards a more cohesive regional identity.

Review Questions

• How does Mercosur aim to influence trade among its member countries?
  • Mercosur influences trade among its member countries by promoting free trade and reducing tariffs on goods exchanged within the bloc. By creating a common market, it allows for the seamless movement of products, services, and factors of production across borders. This integration not only boosts economic activity within member nations but also enhances their competitiveness on a global scale.
• Discuss the significance of Mercosur in the context of economic integration in South America.
  • Mercosur plays a crucial role in promoting economic integration in South America by facilitating trade and cooperation among its member states. The bloc helps to streamline regulations and harmonize standards, making it easier for businesses to operate across borders. This regional collaboration strengthens economies, fosters stability, and creates a unified front for negotiating with other global economic partners.
• Evaluate the challenges faced by Mercosur in achieving its goals of economic integration and regional cooperation.
  • Mercosur faces several challenges in achieving its goals of economic integration, including political disagreements among member nations that can hinder consensus on policies. Economic disparities also exist between countries like Brazil and Argentina, which complicates efforts to harmonize regulations. Additionally, external pressures from global trade agreements may divert attention from regional priorities. Addressing these challenges is essential for Mercosur to fulfill its vision of a fully integrated Southern Common Market.

Related terms

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

Customs Union: A trade agreement where member countries agree to a common external tariff on imports from non-member countries while allowing free trade among themselves.

Economic Integration: The process by which countries reduce trade barriers and increase economic interdependence through agreements that promote trade and investment.