Mercosur

Definition

Mercosur, or the Southern Common Market, is a regional trade bloc in South America formed in 1991 to promote free trade and economic integration among its member countries. The organization aims to facilitate the movement of goods, services, and factors of production across borders, fostering regional cooperation and enhancing economic growth among its members.

5 Must Know Facts For Your Next Test

1. Mercosur was established by the Treaty of Asunción in 1991, originally comprising Argentina, Brazil, Paraguay, and Uruguay.
2. The organization has expanded to include Venezuela as a full member and Bolivia is in the process of joining, enhancing its regional influence.
3. Mercosur operates as a customs union, meaning that it has a common external tariff policy while allowing free trade among its members.
4. In addition to economic goals, Mercosur aims to strengthen political and social ties among member states, promoting democracy and human rights.
5. Challenges faced by Mercosur include political disagreements among members, varying economic conditions, and competition with other trade agreements like the Pacific Alliance.

Review Questions

• How does Mercosur facilitate economic integration among its member countries?
  • Mercosur promotes economic integration by eliminating tariffs on internal trade and establishing a common external tariff for non-member countries. This allows for easier movement of goods, services, and factors of production within the region. By fostering cooperation among members, Mercosur aims to enhance overall economic growth and competitiveness in the global market.
• Discuss the political and social objectives of Mercosur beyond its economic goals.
  • While Mercosur is primarily focused on economic integration, it also has significant political and social objectives. The organization encourages democratic governance and respect for human rights among its member states. By fostering collaboration on issues such as education, environment, and social policies, Mercosur seeks to create a more cohesive regional identity that extends beyond mere trade.
• Evaluate the impact of political disagreements within Mercosur on its effectiveness as a regional trade bloc.
  • Political disagreements within Mercosur can significantly hinder its effectiveness as a regional trade bloc. These disagreements may stem from differing national interests or political ideologies among member states. When member countries prioritize their individual agendas over collective goals, it can lead to stalled negotiations, reduced cooperation, and an inability to implement key policies. This discord can weaken Mercosur's influence in global trade dynamics and limit its potential benefits for member economies.

Related terms

Customs Union: A trade agreement where member countries eliminate tariffs on internal trade while maintaining a common external tariff against non-member countries.

Free Trade Agreement (FTA): An agreement between two or more countries to reduce or eliminate barriers to trade, such as tariffs and quotas, to promote international trade.

Economic Integration: The process by which countries reduce barriers to trade and coordinate economic policies to create a more unified economic space.