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Mercosur


Mercosur or Mercosul is a Regional Trade Agreement (RTA) among Brazil, Argentina, Uruguay and Paraguay, founded in 1991 by the Treaty of Asuncion, 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 Raul Alfonsin of Argentina and Jose Sarney of Brazil signed the Argentina-Brazil Integration and Economics Cooperation Program or PICE .

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 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 Americas (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, as Argentina unilaterally charges a 5 Pesos fee from Mercosur citizens going through the country. In addition, many obstacles are to be addressed before the development of a common currency in MercosurHardman Reis, T. "Aspectos Juridicos da Criacao de um sistema monetario para o Mercosul", Hardman Reis e Gomes Eduardo (Coord.) Globalizacao e Comercio Internacional no Direito da Integracao, 2005, Sao Paulo, Ed. Lex/Aduaneiras, p. 235.

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 2.78 trillion dollars a year (PPP) according to 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 Alvaro 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. On May 2007, the Brazilian Senate asked Venezuela to reconsider the non-renewal of RCTV's license, an oppositionist television network. President Hugo Chavez 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 Virgilio, stated that the party will try to prevent Venezuela's entry in Mercosur.

Members

The following countries are full members, in the process of becoming full members, associate members or observers.

Full Members

Argentina

Brazil

Paraguay

Uruguay

Becoming Full Members

Venezuela "But Venezuelas entry ... is still awaiting ratification by the Brazilian and Paraguayan parliaments. The general elections scheduled in Paraguay for April 2008 are an additional factor of uncertainty."

Associate Members

Bolivia

Chile

Colombia

Ecuador

Peru

Observers

Mexico

See also

Andean Community

Central American Common Market

Customs Union

Free Trade Area of the Americas

Trade bloc

Union of South American Nations

Further Reading

Samuel A. Arieti, The Role of MERCOSUR as a Vehicle for Latin American Integration, Chicago Journal of International Law, vol. 6 (2005/2006), pp. 761-773.

External links

Mercosur Official Website

Radio Mercosur - News and Radio online

BBC - S America Creates Single Market

Mercosur on SICE/OAS site

Council on Foreign Relations: Mercosur: South Americas Fractious Trade Bloc

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This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article Mercosur


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