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By: Mary Courtney Finn
When discussions over trading blocs across the world arise, the EU (European Union), USMCA (United States, Mexico, Canada Agreement), and ASEAN (Association of Southeast Asian Nations) are the first to come up. However, one significant trading bloc is commonly forgotten: Mercosur. Otherwise known as the Southern Common Market, Mercosur is one of the world’s leading trading blocs and biggest economies headquartered in South America. Mercosur’s main objective is “to promote a common space that generates business and investment opportunities through the competitive integration of national economies into the international market.” The current member countries include Argentina, Brazil, Paraguay, and Uruguay. While Venezuela used to be a full fledged member, their participation was suspended in 2016 due to Nicholas Maduro’s violations of democratic principles. In addition to the member countires, , there are also associated states, who do not hold the same amount of power as full time member states but garner some benefit from the bloc. These include Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, and Surinam. Currently, Bolivia is in the process of becoming a full member.
Mercosur is relatively new in the world of trading blocs, as it was not established until 1991. After years of political violence in Latin America that drastically affected trade, the Treaty of Asunción was developed to create free movement of goods and services across member countries, treat foreign goods with the same restrictions as national goods, and help to develop relationships with other members. This later became known as Mercosur. Since its creation, the headquarters of Mercosur have been stationed in Montevideo, Uruguay. The current President pro tempore is Uruguay’s Luis Lacalle Pou and the President of Parliament is Argentina’s Oscar Laborde. To this day, Argentina and Brazil made up nearly 95% of Mercosur’s population and GDP, thus showing the importance of their corporations within the bloc. In fact, many economics forums believe Mercosur was also created in part to mend the relationship between Argentina and Brazil, who spent many years at odds with one another over regional disputes and distrust of economic agendas.
A primary unifying factor of Mercosur’s member states is that nearly every country was ruled under a dictatorship in the late 20th century. Because Mercosur members saw the economic impacts of dictators on their country, democratic ideals were essential to the founding of Mercosur. In the founding papers of Mercosur, it states that “a rupture in democratic order would be cause for a member’s suspension.” And we’ve seen that throughout Mercosur’s history, nations have faced struggles with upholding this rule. In 2012, internal conflict between incumbent President Lugo and domestic opponents caused a question of democracy and eventually caused a short term suspension of Paraguay in Mercosur. Additionally, inner-Mercosur conflicts in recent years include Venezuela’s indefinite suspension. While Venezuela’s vast oil supplies would be a monetary value for the trading bloc, the self-inflicted economic, political, and humanitarian crises that Maduro has brought to Venezuela have been deemed too much for Mercosur to handle. In recent years, fallen oil prices as well as a lack of food and medical supplies have made it difficult for groups such as Mercosur to allow admission to Venezuela. Luckily for Mercosur, the issues with Venezuela are the main ones the bloc has to deal with, and nothing more serious has arisen.
When looking at Mercosur as a whole, it has done a lot of good economically for its member countries. In an area that does not get as much access to international trade, having free trade within the continent is critical, and Mercosur provides just that. Hopefully, in future years, Mercosur will be able to expand to more countries and provide member countries with even more extensive benefits both politically and economically.
Discussion Questions:
How will the US China trade war affect other trading blocs, such as Mercosur?
Will Mercosur’s suspension of Venezuela do more harm than good?
Does Venezuela’s suspension in Mercosur serve as a warning to other member states?
Will Mercosur become more significant in world trade in the coming years?
Should Mercosur admit more countries as full fledged members?
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