Regional Trading Bloc Paper

Topics: International trade, Inflation, Economics Pages: 4 (1539 words) Published: January 14, 2008
The role of regional integration involves two cases: economic and political. (Hill, 2004, p.271, 1) The trading bloc MERCOSUR is the focus of this paper and addresses the advantages and disadvantages of MERCOSUR's trade policies, compares and contrasts the economic development stages of the countries within this trade bloc, and briefly shows the ramifications of this trading bloc's economic development for global business. To begin, this paper starts by describing the trading bloc and giving brief background information. MERCOSUR

MERCOSUR is a trading bloc, which is an area of free trade based on specific tax and tariff agreements made among a group of countries, in South America. This particular trade region is made up of four countries: Argentina, Brazil, Paraguay, and Uruguay. ("Mercosur," 2005, 1) The trade bloc began in the late 1980s with two countries and by the early 1990s incorporated two additional countries with hopes of boosting economic growth, achieving a full free trade area, eliminating customs duties and tariffs between members, and eventually becoming a customs union. ("Mercosur," 2005, 4) Advantages of Regional Integration

Advantages of the regional integration of MERCOSUR include a decline in trade barriers among member countries, reduced tariffs, creates positive growth for member countries, and the draft of the Ouro Preto Protocol, which establishes the framework for making decisions within MERCOSUR and allows for certain exceptions for specific national industries that are important to the South American economy. ("Mercosur," 2005, 6) Trade barriers among member countries are likely to drop gradually allowing MERCOSUR to advance slowly but steadily. Reduced tariffs will also give this trade bloc the opportunity to trade more, which could eliminate products and services from becoming stagnant. The adoption of the Ouro Preto Protocol should ensure that important industries have certain allowances as the economy changes...
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