the encyclopedic entry of Mercosur

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Mercosur or Mercosul, officially the Common Market of the South, Latin American trade organization established in 1991 to increase economic cooperation among the countries of E South America. It is commonly known as Mercosur or Mercosul from the Spanish and Portuguese names, respectively, for the organization. Full members now include Argentina, Brazil, Paraguay, and Uruguay; Bolivia, Chile, Colombia, Ecuador, Peru, and Venezuela (which will become a full member once all four full members ratify its accession) are associate members. The headquarters are in Montevideo, Uruguay. Mercosur is gradually eliminating tariffs between member states and at the same time aiming for a low common external duty, and trade between its members has greatly expanded since 1991. A Mercosur parliament was established in 2007.

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Licensed from Columbia University Press

Mercosur

ethnic_groups =

ethnic_groups_year =

leader_title1 =

leader_name1 = Carlos Álvarez

established_event1 = Declaration of
Foz do Iguaçu

established_date1 =
30 December 1985

established_event2 = Treaty of Asunción

established_date2 = 26 March 1991

established_event3 =

established_date3 = 16 December 1994

area_rank = 2nd

area_magnitude = 1 E13

area_km2 = 12781179

area_sq_mi =

percent_water =

population_estimate = 266.616.849

population_estimate_rank = 4th

population_estimate_year = 2006

population_density_km2 =

population_density_sq_mi =

population_density_rank =

GDP_PPP = U$ 2.895 trillion

GDP_PPP_rank = 5th

GDP_PPP_year =

GDP_PPP_per_capita = U$ 10.858

GDP_PPP_per_capita_rank = 70th

GDP_nominal =

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GDP_nominal_year =

GDP_nominal_per_capita =

GDP_nominal_per_capita_rank =

HDI = 0.817

HDI_rank = 57th

HDI_year =

HDI_category = high

currency =

footnote1 = If Mercosur considered as a single entity. }}

area_rank = 1st

area_magnitude = 1 E13

area_km2 = 17320270

area_sq_mi =

percent_water =

population_estimate = 365,555,352

population_estimate_rank = 3rd

population_estimate_year = 2006

population_census =

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GDP_PPP = U$ 2,970,543

GDP_PPP_rank = 5th

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GDP_PPP_per_capita = U$ 8.126

GDP_PPP_per_capita_rank = 63th

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GDP_nominal_per_capita =

GDP_nominal_per_capita_rank =

HDI = 0.792

HDI_rank = 73th

HDI_year =

HDI_category = medium

currency =

footnote1 = If Mercosur considered as a single entity. }}

Mercosur or Mercosul (Mercado Común del Sur, Mercado Comum do Sul, Ñemby Ñemuha, Southern Common Market) is a Regional Trade Agreement (RTA) among Argentina, Brazil, Paraguay and Uruguay 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/Mercosul 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).

Bolivia, Chile, Colombia, Ecuador and Peru currently have associate member status. Venezuela 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. However, development of the Union of South American Nations seems to suggest that the countries of South America are not opposed to regional integration but merely wary of the United States-backed FTAA.

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. The free movement of individuals has been a matter of practical controversy. In addition, many obstacles are to be addressed before the development of a common currency in Mercosur.

In December 2004 it signed a cooperation agreement with the Andean Community trade bloc (CAN) and they published a joint letter of intention for a 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 263 million people, and the combined Gross Domestic Product of the full-member nations is in excess of US$2.78 trillion a year (Purchasing power parity, PPP) according to International Monetary Fund (IMF) numbers, making Mercosur the fifth largest economy in the World.

FTA with third parties

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.

On 30 December 2005 Colombian president Álvaro Uribe signed a law that ratifies an FTA with Mercosur and gives 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.

On December 18 2007, Mercosur signed a free trade agreement with Israel in Uruguay.

Venezuela

Venezuela applied for membership, but its entry hasn't been ratified by Paraguay nor Brazil, although it was ratified by Argentina and Uruguay. In May 2007, the Brazilian Senate asked Venezuela to reconsider the non-renewal of RCTV's license, an oppositionist television network. President Hugo Chávez responded 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.