Mercosur is made up of four member countries—Argentina, Brazil, Paraguay, and Uruguay—after Venezuela was notified it would be suspended from the trading bloc on December 1. Founding member countries decided to remove Venezuela, which had joined Mercosur in , for its failure to incorporate standards on trade and human rights into national laws, although the country could rejoin if it were to adopt the necessary norms.
Bolivia is in the final stages of the accession to become the sixth member. Mercosur functions as a customs union and free-trade area, and has ambitions to become a common market along the lines of the European Union.
However, more than 20 years after its founding, the group still struggles to achieve that goal. Infographic: Shifting Dynamics in Mercosur Trade. Born out of a series of economic cooperation agreements between Argentina and Brazil after their diplomatic rapprochement in the s, Mercosur was founded in with the signing of the Treaty of Asuncion.
That accord brought Argentina, Brazil, Paraguay, and Uruguay into a customs union with the ultimate goal of a common market.
Though it began with just four countries, members hoped the organization could be a possible springboard for the integration of all of South America. As envisioned at its founding, Mercosur would gradually achieve the steps to form a common market in the image of the European Union. Plans called for the creation of a common external tariff CET and the free movement of goods, services, currency, and people between members.
The union even considered the creation of a common currency, the gaucho , though that idea was later discarded. Throughout the following decade, a number of trade disputes between member countries regarding tariff barriers and development projects divided the bloc. Members decided to temporarily suspend Paraguay in after its senate impeached then-President Fernando Lugo after a string of incidents of civil unrest turned fatal.
The country was permitted to rejoin after presidential elections in April Its membership is expected in the first half of All rights reserved. Republish Print. Related Tags Politics. The Week with IPS. Your contribution will make a huge difference. Chile currently engages in trade negotiations with Bolivia, South Korea, Japan and the European Union, with which it expects to have an initial accord signed by Chile is in discussions with Mexico and Canada to upgrade its bilateral pacts with both countries.
In addition, for several years now, Chilean and U. Meanwhile, Brazil is so eager to get Chile into Mercosur as a full member that President Cardoso recently suggested the group consider lowering its common external tariff rather than pressuring Chile to raise its tariffs.
Politically this is a nonstarter, however, since powerful economic interests in Brazil and Argentina will combine forces to oppose the proposal. A formal decision on Chile's application is expected this month, but the impasse created by Mercosur regulations will be difficult to overcome. If Chile were permitted to join Mercosur without adopting the same rules followed by other countries in the union, the group's cohesiveness will crumble. Other members, such as Uruguay, Paraguay and Argentina, would demand similar exemptions, including the freedom to negotiate their own trade deals with non-Mercosur countries.
If that happens, Brazil's carefully crafted strategy of making Mercosur the foundation of Brazilian regional leadership would also break down. Keep Reading: Create an account to get 3 free articles. Job Title. Create Account. Forecasts are exclusive to subscribers. Subscribe for instant access.
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