Mercosur

Definition

Mercosur, or the Southern Common Market, is a regional trade bloc in South America established in 1991 to promote free trade and economic integration among its member countries, which include Argentina, Brazil, Paraguay, and Uruguay. The primary objective of Mercosur is to create a common market by eliminating tariffs and fostering collaboration in economic policies, enhancing regional cooperation and stability.

5 Must Know Facts For Your Next Test

1. Mercosur was founded by the Treaty of Asunción in 1991, aiming to promote free trade and economic cooperation among member states.
2. The bloc's integration efforts include not just trade but also social and political cooperation among its members.
3. In addition to the original members, Mercosur has associated countries such as Bolivia, Chile, and Peru that participate in trade agreements with the bloc.
4. Mercosur has faced challenges, including political instability within member countries and differing economic policies, impacting its effectiveness in achieving full economic integration.
5. The organization also seeks to negotiate trade agreements with other regions, including the European Union and ASEAN, to expand its global economic reach.

Review Questions

• What are the main objectives of Mercosur and how does it aim to achieve economic integration among its member states?
  • The main objectives of Mercosur are to promote free trade and enhance economic integration among its member states. It aims to achieve this by eliminating tariffs on goods traded between member countries, creating a common market that facilitates the movement of products and services. Additionally, Mercosur encourages collaboration in economic policies and seeks to strengthen political ties among its members to ensure stability and foster growth within the region.
• Discuss the challenges faced by Mercosur in pursuing its goals of economic integration among its member countries.
  • Mercosur faces several challenges in achieving its goals of economic integration. Political instability within member countries can disrupt collaborative efforts and decision-making processes. Moreover, differing economic policies among members can lead to conflicts regarding tariff regulations and trade practices. The bloc has also struggled with external factors, such as competition from other trade agreements and global economic fluctuations that affect the member states' economies.
• Evaluate the impact of Mercosur's initiatives on the broader context of South American economic relations and global trade.
  • Mercosur's initiatives have significantly influenced South American economic relations by promoting regional cooperation and reducing trade barriers among member states. This has led to increased intra-regional trade, enhancing economic ties between countries that previously faced significant tariffs. On a global scale, Mercosur's efforts to negotiate trade agreements with other regions aim to expand market access for its members, potentially increasing their competitiveness in international markets. However, the effectiveness of these initiatives depends on overcoming internal challenges and aligning member countries' interests with a cohesive external trade strategy.

Related terms

Free Trade Agreement: An arrangement between two or more countries to eliminate trade barriers and tariffs on goods and services, encouraging greater economic cooperation.

Customs Union: A type of 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 of reducing or eliminating barriers to trade and investment between countries to enhance economic cooperation and interdependence.