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Mercosur or Mercosul ( , , , ) is a Regional Trade Agreement (RTA) among Argentinamarker, Brazilmarker, Paraguaymarker and Uruguaymarker founded in 1991 by the Treaty of Asunción, which was later amended and updated by the 1994 Treaty of Ouro Preto. Its purpose is to promote free trade and the fluid movement of goods, people, and currency.

Mercosur origins trace back to 1985 when Presidents Raúl Alfonsín of Argentina and José Sarney of Brazil signed the Argentina-Brazil Integration and Economics Cooperation Program or PICE (Spanish: Programa de Integración y Cooperación Económica Argentina-Brasil, Portuguese: Programa de Integração e Cooperação Econômica Argentina-Brasil). . The program also proposed the Gaucho as a currency for regional trade.

Boliviamarker, Chilemarker, Colombiamarker, Ecuadormarker and Perumarker currently have associate member status. Venezuelamarker signed a membership agreement on 17 June 2006, but before becoming a full member its entry has to be ratified by the Paraguayan and the Brazilian parliaments. The founding of the Mercosur Parliament was agreed at the December 2004 presidential summit. It should have 18 representatives from each country by 2010.

Role and potential

Some South Americans see Mercosur as giving the capability to combine resources to balance the activities of other global economic powers, especially the North American Free Trade Agreement (NAFTA) and the European Union. The organization could also potentially pre-empt the Free Trade Area of the Americas (FTAA); however, over half of the current Mercosur member countries rejected the FTAA proposal at the IV Cumbre de las Américas (IV Summit of the Americas) in Argentina in 2005.

The development of Mercosur was arguably weakened by the collapse of the Argentine economy in 2001 and it has still seen internal conflicts over trade policy, between Brazil and Argentina, Argentina and Uruguay, Paraguay and Brazil, etc. In addition, many obstacles are to be addressed before the development of a common currency in Mercosur.

In 2004 it signed a cooperation agreement with the Andean Community of Nations trade bloc (CAN) and they published a joint letter of intention for future negotiations towards integrating all of South America. The prospect of increased political integration within the organization, as per the European Union and advocated by some, is still uncertain.

The bloc comprises a population of more than 270 million people, and the combined Gross Domestic Product of the full-member nations is in excess of US$2.4 trillion a year (Purchasing power parity, PPP) according to International Monetary Fundmarker (IMF) numbers, making Mercosur the fifth largest economy in the World. It is the fourth largest trading bloc after the European Union.

The working of Mercosur has not met with universal approval within interested countries. Chilemarker has to a certain extent preferred to pursue bilateral agreements with trading partners, and there have been calls from Uruguayanmarker politicians for this example to be followed.

FTA with third parties

Mercosur summit, 2006
Recently, with the new cooperation agreement with Mercosur, the Andean Community gained four new associate members: Argentina, Brazil, Paraguay and Uruguay. These four Mercosur members were granted associate membership by the Andean Council of Foreign Ministers meeting in an enlarged session with the Commission (of the Andean Community) on 7 July 2005. This move reciprocates the actions of Mercosur which granted associate membership to all the Andean Community nations by virtue of the Economic Complementarity Agreements (Free Trade Agreements) signed between the CAN and individual Mercosur members.

Colombian president Álvaro Uribe signed a free trade agreement with Mercosur in December 2005, giving Colombian products preferential access to a market of 230 million people. Colombian entrepreneurs will also be able to import materials and capital goods from Mercosur at lower costs due to reduced tariffs resulting from the agreement.

The agreement's asymmetry clauses favor Colombia because it allows the gradual and progressive reduction of tariffs and likewise gives Colombia the opportunity to gradually reform its production system to adapt it to the requirements of the future negotiations within the scheme of Mercosur and the Union of South American Nations.

Mercosur signed a free trade agreement with Israelmarker in Uruguay in December 2007.

Venezuela

Venezuela applied for membership, but its entry has not been ratified by Paraguay and Brazil, although it was ratified by Argentina and Uruguay.

Ratification process in Brazil

The process was approved by the Brazilian Government and the Chamber of Deputies but awaits approval by the Senate. In May 2007, the Brazilian Senate asked Venezuela to reconsider the non-renewal of RCTV's license, an oppositionist television network. Venezuelan president Hugo Chávez responded by accusing the Brazilian Congress of being subservient to interests of the United States. The leader of the Brazilian Social Democracy Party in the Senate, senator Arthur Virgílio, stated that the party will try to prevent Venezuela's entry in Mercosur. On December 18, 2008, the Brazilian Chamber of Deputies approved by 265 votes, 61 against and 6 abstentions, Venezuela's bid for membership in Mercosur. The bill was forwarded to the Brazilian Senate, where it was still pending as of 31 May 2009, though Brazilian President Luiz Inácio Lula da Silva said he expected final approval by September. However, some members of the Senate condemned Hugo Chavez's alleged attacks on freedom of the press and expression in Venezuela. One senator Flexa Riberio said, "The Brazilian Senate needs to send a strong message in support of the reestablishment of full democracy in Venezuela." The decision could further delay Venezuela's entry into Mercosur.

In September 2009 President Luiz Inácio Lula da Silva said that he is confident the Senate will approve the entry of Venezuela and added that "There is no Senate opposition to the entry of Venezuela into Mercosur. What exists is a natural process of discussion of the senators who want to evaluate the pros and cons of the enlargement of Mercosur with Venezuela's entry,". According to Lula, the expansion of the organisation will especially benefit the northern states of Brazil. The ambassador of Brazil in Caracas, Antonio Simoes was called to Brasilia to meet with 81 senators and explain the benefits of Venezuela's entry into Mercosur for Brazil.

Ratification process in Paraguay

The government of Paraguay supports Venezuela's entry into Mercosur however this process is complicated by opposition from the right-wing Colorado Party which until 2008 had ruled Paraguay for 61 years and controls the upper house whose support is needed to pass the bill. On March 4, 2009, the External Relations Commission of the Paraguayan Chamber of Senators could not approve a recommendation for Venezuela's bid for membership in Mercosur. The bill was later withdrawn by the Paraguayan government after it feared defeat in the Congress, after several legislators questioned Hugo Chavez's "commitment to democracy" following the closure of several media outlets in Venezuela.

Members

The following countries are full members, in the process of becoming full members, associate members or observers.

Full members



Applying for full membership



Associate members



Observers



See also



Further reading



References

  1. [1]
  2. Mercosur parliament starts on sour note. Reuters. December 14, 2006.
  3. Phillips, N: Regionalist governance in the new political economy of development: relaunching the Mercosur. Third World Quarterly 22: 565–583. 2001.
  4. Robles, F (2001): Latin American corporate strategy under the new regionalism in Prakash, A. and Hart, J.A. (eds.) Responding to globalization. London: Routledge.
  5. Hardman Reis, T. (2005). "Aspectos Jurídicos da Criação de um sistema monetário para o Mercosul", Hardman Reis e Gomes Eduardo (Coord.) Globalização e Comércio Internacional no Direito da Integração. São Paulo, Ed. Lex/Aduaneiras, p. 235.
  6. Davison, Phil (December 4, 2004). South America takes first step to a union of nations. The Independent.
  7. S America launches trading bloc. BBC News. December 9, 2004.
  8. Klonsky, Joanna; Hanson, Stephanie (August 20, 2009). Mercosur: South America’s Fractious Trade Bloc. Council on Foreign Relations.
  9. Garces, Raul O. (August 6, 2009). Uruguay: Ex-dictator's son says quit Mercosur. Associated Press.
  10. [2]
  11. Colombia signs FTA with Mercosur. Wikinews. January 2, 2006.
  12. Brazil Senate leader against Venezuela in Mercosur. Stabroek News. March 6, 2009.
  13. Brazilian Congress puts Venezuela inches closer to Mercosur. MercoPress. December 18, 2008. Retrieved on 22 December 2008.
  14. "Brazilian President is confident Venezuela joins Mercosur, Noticias Financieras, 31 May 2009.
  15. Brazilian Senate condemns Venezuela further delaying its Mercosur bid. MercoPress. September 4, 2009.
  16. http://www.google.com/hostednews/epa/article/ALeqM5iZm80LhIfqoBwtOVSl72lLftWqtQ
  17. http://el-nacional.com/www/site/p_contenido.php?q=nodo/71028/Econom%C3%ADa/Paraguay-no-aprueba-ingreso-de-Venezuela-al-Mercosur
  18. Paraguayan Chamber of Senators does not aprove first attempt to grant Venezuela membership in Mercosur El Universal. Retrieved on 4 March 2009.
  19. Paraguayan government withdraws bill for Venezuela’s Mercosur incorporation. MercoPress. August 14, 2009.
  20. "But Venezuela’s entry ... is still awaiting ratification by the Brazilian and Paraguayan parliaments. The general elections scheduled in Paraguay for April 2008 are an additional factor of uncertainty."


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