Mercosur

Definition

Mercosur, or the Southern Common Market, is a regional trade bloc in South America established in 1991 that aims to promote economic integration and cooperation among its member countries. It includes Argentina, Brazil, Paraguay, and Uruguay as full members, with Bolivia's membership pending. The bloc seeks to eliminate trade barriers, create a common market, and enhance political and economic ties among its members, which is essential for fostering regional development and sustainability.

5 Must Know Facts For Your Next Test

1. Mercosur was founded by the Treaty of Asunción in 1991, aiming to foster economic integration and enhance regional stability among its member states.
2. The bloc's primary goal is to create a common market by eliminating tariffs on goods traded between member countries, facilitating easier access to each other's markets.
3. Mercosur has expanded its scope beyond trade to include cooperation in areas such as social policies, cultural exchanges, and environmental protection.
4. Venezuela was a full member of Mercosur but was suspended in 2016 due to concerns over its internal political situation and human rights issues.
5. In recent years, Mercosur has faced challenges including political instability among member nations and competition from other trade agreements like the Pacific Alliance.

Review Questions

• How does Mercosur function as a customs union, and what are its main objectives regarding trade among member countries?
  • Mercosur functions as a customs union by allowing free movement of goods among its member countries while implementing a common external tariff on imports from non-member states. Its main objectives are to eliminate trade barriers within the bloc, thereby creating a common market that enhances economic cooperation and integration among Argentina, Brazil, Paraguay, and Uruguay. This promotes regional development and helps boost economic growth through increased trade flows.
• Discuss the significance of Mercosur in promoting political and economic stability in South America.
  • Mercosur plays a crucial role in promoting political and economic stability in South America by fostering closer ties among its member nations through economic integration. By reducing trade barriers and facilitating cooperation on social policies, Mercosur helps to mitigate conflicts and promotes peaceful relations between neighboring countries. This collaborative framework encourages dialogue and joint action on shared challenges like environmental issues and regional security, contributing to a more stable political landscape in the region.
• Evaluate the challenges that Mercosur faces today and their implications for regional integration in South America.
  • Mercosur faces several challenges today, including political instability within member countries, economic disparities among them, and competition from other regional trade agreements like the Pacific Alliance. These issues hinder the bloc's ability to achieve deeper integration and reduce trade barriers effectively. Furthermore, tensions arising from differing political ideologies among member nations can complicate decision-making processes within Mercosur. If these challenges remain unaddressed, they could undermine the effectiveness of the bloc in promoting sustainable development and cohesive regional growth.

Related terms

Customs Union: A trade agreement where member countries agree to charge the same import duties and allow free access to each other's markets.

Free Trade Agreement: An agreement between countries to reduce or eliminate trade barriers such as tariffs and quotas on goods and services.

Trade Liberalization: The removal or reduction of restrictions or barriers on the free exchange of goods between nations.