On all continents, except, of course, Antarctica, countries are united in regional economic unions. The creation of a common economic space helps states strengthen regional integration and create conditions for local business to compete with global companies. The Mercosur Trade and Economic Union, whose composition is constantly expanding, was created to organize a common Latin American market. MERCOSUR is an abbreviation for Mercado Común del Sur (translated as "South American Common Market").
History of creation
Understanding of the need to unite came to the leaders of the countries of the region a long time ago: the first attempt was made in 1960. The Latin American Free Market Association was established by ten countries.
The association includes both relatively developed countries - Brazil and Argentina - and the poor - Bolivia and Ecuador. Initially, the underlying economic inequality did not contribute to the successful development of cooperation, especially trade. Political and economic crises finally destroyed the interest of countries in this organization. In 1986, Brazil and Argentina announced the establishment of an open economic integration project and encouraged countries in the region to join. In 1991, the Asuncion Agreement was signed on the creation of a customs union and a common market for Mercosur countries. In 1995, the contract entered into force, more than 85% of goods from third countries began to apply common customs tariffs.
Members
The agreement on the creation of the Latin American integration association was signed by four countries. Buffer countries were added to the two project initiators, and the composition of the MERCOSUR countries became as follows: Brazil, Argentina, Uruguay and Paraguay. In 2012, Venezuela became a full member of the association. But now the answer to the question which countries are included in MERCOSUR is not always unequivocal. The membership of Paraguay and Venezuela is periodically suspended for violating democratic principles. Associated countries - members of MERCOSUR - Chile, Bolivia, Colombia, Ecuador and Peru.
Who controls
All the issues of the functioning of the integration association are dealt with by the three main institutions responsible for making major political decisions. The supreme body is the Council of the Common Market, which includes the Ministers of Foreign Affairs and the Ministers of Economy of the Mercosur countries. The work of the Council is provided, inter alia, by the Commission of Permanent Representatives, the Ministerial Conference, the High-Level Panel and other institutions.
The executive body of the integration union is the Common Market Group, to which countries delegate one representative each. Among the members must be representatives of the ministries of economy, foreign affairs and central banks. The Trade Commission is responsible for ensuring the application of common commercial policy tools necessary for the functioning of the customs union, as well as monitoring, reviewing and issues related to the general commercial policy, with trade within the states belonging to MERCOSUR and with third countries. The only permanent body - the secretariat - provides advice and technical support to the work of the integration union.
The first steps
Like any other international integration project, MERCOSUR began with steps to create a free common market. Mercosur countries announced the formation of a single market and the organization of a customs union. In Latin America, a subregional free trade zone has been created, with unhindered movement of capital, goods and services. Within the association, duties, quotas and non-tariff restrictions were abolished. For trade with third countries, common customs rules were adopted, which included, among other things, a single external tariff. The countries agreed to coordinate policies in industry, agriculture, transport, and communications. Also, members of the association were going to pursue an agreed monetary and financial policy. MERCOSUR was also to ensure the implementation of a common policy towards third countries and other integration associations.
And the first successes
The MERCOSUR integration model, which provides for the use of instruments of an open market economy, primarily trade liberalization, has helped to quickly achieve first successes. In the early years, a program was implemented to create a free market, including an annual reduction in customs duties of 7%. As a result, almost 90% of the mutual trade spheres were exempted from customs duties and non-tariff restrictions.
In 1991-1998, trade within the integration union increased from 4.1 to 12 billion US dollars, the share in relation to the total export of countries from 8.8 to 19.3%, and by 1998 to 25.3%. The member countries of MERCOSUR increased mutual trade primarily due to industrial goods produced by the automotive, chemical, and pharmaceutical industries. A large common market, liberal terms of trade attracted significant foreign investment. In 1999, nearly a quarter of all investments in emerging markets came from Mercosur, $ 55.8 billion. This is a tenfold increase compared with the period of the union.
What's in the present
The stage of rapid growth ended by 1998, together with the whole world the association was experiencing an economic crisis. The volumes of mutual trade decreased, the MERCOSUR countries ceased to comply with the relevant rules. The crises of the largest members of the integration union of Brazil and Argentina hit the economies of all countries in the region. Trade in the general market has more than halved: from 41.3 billion (1998) to $ 20 billion in 2002. The share in total exports decreased to 11.4%.
The recovery of the world economy and a change in the model of integration unification allowed revitalizing Mercosur. The economic growth of the MERCOSUR countries made it possible to significantly increase international trade, the share of the association in world exports grew from 1.5% to 1.7% in the period from 2002 to 2008. And continues to increase. Trade grew even during the 2008-2009 crisis. Gradually, integration processes are transferred to other areas, including social policy and civil society. Since 2015, you can travel without a passport between the countries of MERCOSUR and Colombia, Chile, Ecuador, Peru.
