Mercosur (in Spanish), Mercosul (in Portuguese), or Ñemby Ñemuha (in Guarani), officially Southern Common Market, is a South American trade bloc established by the Treaty of Asunción in 1991 and Protocol of Ouro Preto in 1994. Its full members are Argentina, Brazil, Paraguay and Uruguay. Venezuela is a full member but has been suspended since 1 December 2016. Associate countries are Bolivia, Chile, Colombia, Ecuador, Guyana, Peru and Suriname.
The name Mercosur is a Spanish acronym of Mercado Común del Sur (Portuguese Mercosul, acronym of Mercado Comum do Sul) which both mean Common Market of the South.
Mercosur's origins are linked to the discussions for the constitution of a regional economic market for Latin America, which go back to the treaty that established the Latin American Free Trade Association in 1960, which was succeeded by the Latin American Integration Association in the 1980s.
At the time, Argentina and Brazil made progress in the matter, signing the Iguaçu Declaration (1985), which established a bilateral commission, which was followed by a series of trade agreements the following year. The Integration, Cooperation and Development Treaty, signed between both countries in 1988, set the goal of establishing a common market, to which other Latin American countries could join.
Paraguay and Uruguay joined the process and the four countries became signatories to the Treaty of Asunción (1991), which established the Southern Common Market, a trade alliance aimed at boosting the regional economy, moving goods, people among themselves, workforce and capital. Initially a free trade zone was established, in which the signatory countries would not tax or restrict each other's imports.
More information: MERCOSUR
As of January 1, 1995, this area became a customs union, in which all signatories could charge the same quotas on imports from other countries, a common external tariff. The following year, Bolivia and Chile acquired membership status. Other Latin American nations have expressed interest in joining the group.
Mercosur's purpose is to promote free trade and the fluid movement of goods, people, and currency. Since its foundation, Mercosur's functions have been updated and amended many times; it currently confines itself to a customs union, in which there is free intra-zone trade and a common trade policy between member countries.
In 2019, the Mercosur had generated a nominal gross domestic product (GDP) of around 4.6 trillion US dollars, placing the bloc as the 5th economy of the world. The bloc places high on the Human Development Index. It has signed free trade agreements with Israel, Egypt, Japan and the European Union, among others.
For five centuries South America has been the scene of some of the most violent battles in the Americas. Since the arrival of the Spanish and Portuguese to the continent, the La Plata Basin has been the scene of Luso-Spanish disputes over territory, the territory that today is Uruguay, was once Spanish, then Portuguese, again Spanish and Brazilian. However, at the same time, in this region there are fundamental chapters of the political and economic emancipation of future Mercosur members.
During the 16th and 17th centuries, Spain organized the commercial system of its colonies around the fleets and galleons scheme, authorizing only certain ports the right to send or receive goods originating from these colonies. For cities like Buenos Aires, founded in 1580, this system threatened the region's economic development. To face this economic confinement, the population of Buenos Aires saw the only possible way out: the commercial exchange, albeit illegally, with Brazil. This was the beginning of a relationship destined to grow.
In the 19th century, the process of political emancipation in South America accentuated the contrasts between the countries of the region. During this period, important chapters in the history of Brazil, Argentina, Paraguay and Uruguay occurred.
More information: The Wall Street Journal
It is enough to mention the Cisplatine War, the independence of the Republic of Uruguay, the Uruguayan Great War, the Ragamuffin War, the dispute between unitaries and federalists in Argentina and the Paraguayan War: alliances, interventions and conflicts that forged the historical context of formation of the La Plata nation-states.
In 1941, in the middle of the Second World War, Brazil and Argentina for the first time tried to create a Customs Union between their economies. However, this did not happen due to the countries' diplomatic differences in relation to Axis policies, after the attack on Pearl Harbor. With the end of the war, the need for interaction between nations became imminent and, consequently, economic blocs formed. In Latin America, however, there was no union that obtained satisfactory results.
Mercosur was finally established in 1991 by the Treaty of Asunción, based on the Buenos Aires Act, the Treaty of Asunción defined rules and conditions for the creation of a free trade zone among its four signatories.
The Treaty of Asunción was a treaty between the countries of Argentina, Brazil, Paraguay, and Uruguay signed on March 26, 1991. The objective of the treaty, signed in Asunción, was to establish a common market among the participating countries, popularly called Mercosur (Southern Common Market).
Later, the Treaty of Ouro Preto was signed to supplement the first treaty, establishing that the Treaty of Asunción was to be a legally and internationally recognized organization.
The treaty defined a program of gradual elimination of import/export fees that would reach a free commerce zone by the end of 1994. Even though the dates of the program were not followed and the free zone was not yet reached, the treaty established the basis for the Mercado Común del Sur (Mercosur).
More information: Connect Americas
invest in Uruguay and Paraguay.
These are small economies,
so some things can be produced in these countries
that will give them greater and more equitable
involvement in the Mercosur game.
Luiz Inacio Lula Da Silva
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