Mercosur
Mercosur or Mercosul (Spanish: Mercado Común del Sur, Portuguese: Mercado Comum do Sul, English: Southern Common Market) is a trading zone between Brazil, Argentina, Uruguay, Paraguay and Venezuela, founded in 1991 by the Treaty of Asunción, which was later amended and updated by the 1995 Treaty of Ouro Preto. Its purpose is to promote free trade and the fluid movement of goods, peoples, and currency. Bolivia, Chile, Colombia, Ecuador and Peru have associate member status. On December 9th, 2005, Mercosur nations agreed to incorporate Venezuela as a full member. After changes in Venezuelan policy to adhere to exisiting Mercosur rules, Venezuela will become a voting member. On December 30th, 2005 it was announced that Bolivia would be invited to join as a full member. The organization has a south and central America integration vocation.
Some South Americans see Mercosur as giving the capability to combine resources to balance the activities of other global economic powers, perhaps especially the United States 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 Americas (IV Summit of the Americas) in Argentina in 2005.
The development of Mercosur was arguably weakened by the collapse of the Argentine economy in 2002 and it has still seen internal conflicts over trade policy, between Brazil and Argentina, for example.
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.
There are more than 220 million consumers in this region and the combined Gross Domestic Product of the member nations is more than one trillion dollars a year.
FTA with third parties
O n December 30, 2005 Colombian president Alvaro Uribe signed a law that ratifies a 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 South American Community of Nations.
See also
- Argentina
- Brazil
- Paraguay
- Uruguay
- Venezuela
- trade bloc
- Andean Community
- South American Community of Nations