What is MERCOSUR? Political and Commercial Benefits
MERCOSUR, short for the Southern Common Market, is a trade bloc in South America established in 1991 by the Treaty of Asunción. The founding members of MERCOSUR are Argentina, Brazil, Paraguay, and Uruguay. The bloc has since expanded to include associate members such as Chile, Bolivia, Peru, Colombia, Ecuador, and Suriname.
The main goal of MERCOSUR is to promote free trade and economic integration among its member countries. To achieve this, the bloc has implemented a common external tariff on goods imported from non-member countries. It has signed free trade agreements with several other nations and regions, including the European Union and Israel. Additionally, MERCOSUR member countries have agreed to reduce trade barriers among themselves, such as eliminating tariffs on goods traded within the bloc.
MERCOSUR also has a political dimension, promoting integration and cooperation among the member countries on matters of common interest such as democracy, human rights, and the fight against drug trafficking.
However, MERCOSUR has faced several challenges over the years. Some of these include a lack of consistent commitment to the bloc by some member countries and difficulty in reaching agreements on trade liberalization and other issues. Furthermore, the covid-19 pandemic has hit hard on MERCOSUR country’s economies and has led to a decrease in trade and a resurgence of protectionist measures.
Despite these challenges, MERCOSUR remains an important economic and political organization in South America. Furthermore, it continues to work towards integration and cooperation among its member countries.
What are the commercial benefits of MERCOSUR?
One of the leading commercial benefits of MERCOSUR is increased access to larger markets for member countries. By eliminating tariffs on goods traded within the bloc, companies in member countries have a wider range of potential customers and can sell their products at a lower cost. This can lead to increased exports and economic growth for member countries.
MERCOSUR also provides a framework for member countries to negotiate and sign free trade agreements with other nations and regions. These agreements can open up even more markets for MERCOSUR member countries, increasing their export opportunities and attracting foreign investment. MERCOSUR has signed free trade agreements with several other countries and regions. Some of these are the European Union, Israel, Egypt, and Palestine.
In addition, MERCOSUR has played a key role in promoting regional integration, which can lead to increased efficiency and competitiveness for member countries. For example, MERCOSUR member countries can take advantage of economies of scale. They are encouraged to produce goods and services together and by creating regional supply chains.
However, the commercial benefits of MERCOSUR have been hindered by the lack of consistency among member countries in implementing the bloc’s agreements, as well as by trade disputes among member countries.
Furthermore, the covid-19 pandemic has hit hard MERCOSUR country’s economies. This has led to a decrease in trade and a resurgence of protectionist measures. These countries are still trying to recover from this economic crisis and it remains to be seen how it will affect the commercial benefits of the bloc.
Overall, while MERCOSUR has faced challenges, it continues to offer significant commercial benefits for its member countries. Through increased access to larger markets, the ability to negotiate free trade agreements, and opportunities for regional integration.
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