Criticisms and Projections of Mercosul: the Southern Common Market
Conor Mullan
Economics 462
Brad Barham
Criticisms and Projections of MERCOSUL: The Southern Common Market
MERCOSUL first began as a trade bloc between Argentina and Brazil when they signed Programa de Integração e Cooperação Econômica Argentina-Brasil (PICE) in 1985. After the relative success of this program, Uruguay and Paraguay joined in 1991 once the Treaty of Asunción established a southern common market in the Southern Cone. This treaty was later revised in 1994 when member states signed the Protocol of Ouro Preto, which further eliminated protectionism of certain industries. Though the relative success of MERCOSUL can be measured by the slight increase in GDP, the political and corruption issues that has enveloped the southern market hinders its expansion. Bolivia, Chile, Colombia, Ecuador and Peru all have associate member status in MERCOSUL, mostly due to their bilateral trade agreements with other nations, typically the United States. Venezuela is awaiting membership into the trade area, but a lack of confidence from the Paraguayan government is delaying its inclusion. Yet another obstacle within MERCOSUL is its difficulty integrating members. Because both the Brazilian and Argentine economies often overshadow smaller members, it becomes difficult for Uruguay and Paraguay to realize the full benefits of the trade bloc and have strong opinions about seeking bilateral agreements elsewhere. Brazil and Argentina, however, feel they should protect the sovereignty of MERCOSUL and not allow member states to set up other bilateral agreements.
These hurdles have greatly affected certain development projections of MERCOSUL in the Western Hemisphere. A common opinion is that if the Western Hemisphere does not integrate to create a free trade area, the economies of China, Europe and India will soon overshadow the region. Thus, in order to stay competitive they will need to cooperate with NAFTA and the United States. Europe has also tried to compete for free
Economics 462
Brad Barham
Criticisms and Projections of MERCOSUL: The Southern Common Market
MERCOSUL first began as a trade bloc between Argentina and Brazil when they signed Programa de Integração e Cooperação Econômica Argentina-Brasil (PICE) in 1985. After the relative success of this program, Uruguay and Paraguay joined in 1991 once the Treaty of Asunción established a southern common market in the Southern Cone. This treaty was later revised in 1994 when member states signed the Protocol of Ouro Preto, which further eliminated protectionism of certain industries. Though the relative success of MERCOSUL can be measured by the slight increase in GDP, the political and corruption issues that has enveloped the southern market hinders its expansion. Bolivia, Chile, Colombia, Ecuador and Peru all have associate member status in MERCOSUL, mostly due to their bilateral trade agreements with other nations, typically the United States. Venezuela is awaiting membership into the trade area, but a lack of confidence from the Paraguayan government is delaying its inclusion. Yet another obstacle within MERCOSUL is its difficulty integrating members. Because both the Brazilian and Argentine economies often overshadow smaller members, it becomes difficult for Uruguay and Paraguay to realize the full benefits of the trade bloc and have strong opinions about seeking bilateral agreements elsewhere. Brazil and Argentina, however, feel they should protect the sovereignty of MERCOSUL and not allow member states to set up other bilateral agreements.
These hurdles have greatly affected certain development projections of MERCOSUL in the Western Hemisphere. A common opinion is that if the Western Hemisphere does not integrate to create a free trade area, the economies of China, Europe and India will soon overshadow the region. Thus, in order to stay competitive they will need to cooperate with NAFTA and the United States. Europe has also tried to compete for free