Venezuela and Mercosur, Trade Blocs

Only available on StudyMode
  • Download(s) : 95
  • Published : February 22, 2011
Open Document
Text Preview
Unit 4 International business setting up a business in Venezuela- Mercosur/Trade blocs, etc

ATIA Hotel will be a four star hotel on a budget and of smaller size. The hotel will be set up as LLC of Venezuela and will be located in Venezuela.
MERCOSUR: In English, Mercosur means Southern Common Market.Mercosur is a Regional Trade Agreement among Argentina, Brazil, Paraguay and Uruguay. It was founded in 1991 and later updated in 1994. Purpose of founding Mercosur is to promote free trade. Four countries of Mercosur had combined population of 200 million and GDP of $851 billion (in 1991). After NAFTA(North American Free Trade Agreement) and European Union,Mercosur has highest capability to combine resources and influence international trade.(alertNet)

Venezuela applied for membership of Mercosur. Venezuela was advanced from associate to full member at Mercosur’s 29th summit meeting in 2005. Mercosur’s four initial members are Argentina, Brazil, Paraguay and Uruguay and associate members are Bolivia, Chile, Colombia,(Petrash,V.)

The incorporation of Venezuela into the Common Market of the South (Mercosur) is a historic step in the economic integration of Latin America. Venezuela was upgraded from associate to full member at Mercosur's 29th summit meeting, held on December 8, 2009, in Montevideo, Uruguay. Venezuela will be joining one of the largest free trade areas of the world and will benefit from the group's preferential trade treatment. The incorporation of Venezuela into the Common Market of the South (Mercosur) is a historic step in the economic integration of Latin America. Venezuela was upgraded from associate to full member at Mercosur's 29th summit meeting, held on December 8, 2009, in Montevideo, Uruguay. Venezuela will be joining one of the largest free trade. In a giant step for the region, Argentina, Brazil and Venezuela have signed an agreement to complete a gigantic gas-petroleum pipeline within five years. This pipeline would run from Venezuela over Brazilian territory to Manaos in the north and then to the northeast, continuing to the south of Brazil, Buenos Aires and Montevideo. The pipeline would extend to between 4,969 and 6,211 miles long and cost up to $10 billion. (Mercosur Regional Strategy Paper)

This new trade bloc now represents member nations with more than $1.3 trillion in gross domestic product, and associated nations with $2.1 trillion GDP. With Venezuela's oil reserves, it will be the third most important economic and geopolitical trading bloc in the world. Venezuela is also expanding bilateral trade in the region, by convoking a series of business expos to provide investment and trade opportunities. These expos, facilitated through the Ministry of Trade and the Export Bank, will be held this year with Colombia, Argentina, Brazil, Uruguay, Bolivia, Ecuador, and the Caribbean. Their goal is to at least double the bilateral trade with each country. (Fox, M.)

Benefits of Mercosur-Before other events or stages construction of a particular kind of a long distance pipe line roughly or in the neighborhood the calculated cost of $10billion will allow access to many advantages of a considerable number of construction businesses, their employees, new employment opportunities, import of heavy machineries, and visit of foreign experts. It will open all round avenues to the countries involved directly and boost hotel and hospitality industries, healthcare, transport, trade and a number small, medium and heavy industries. As President Chavez says that "not only is this historic but we, the heads of state, are responsible for the demands set upon us" to make sure it benefits the 367 million people in the region. Due to free trade, cheap labor, raw materials will be available in Venezuela, the effort by many to successfully transfer of goods and services to different regions will be a simplified process in making it easier to do. Working together or partnerships involving different South...
tracking img