On all continents, except, of course, Antarctica, countries unite in regional economic unions. The creation of a common economic space helps states to strengthen regional integration and create conditions for local businesses to compete with global companies. The MERCOSUR trade and economic union, whose composition of countries is constantly expanding, was created to organize a common Latin American market. MERCOSUR is short for Mercado Común del Sur (translated as "South American Common Market").
History of Creation
Understanding that it is necessary to unite came to the leaders of the countries of the region a long time ago: the first attempt was made in 1960. Ten countries formed the Latin American Free Market Association.
The association included both relatively developed countries - Brazil and Argentina - and poor -Bolivia and Ecuador. Economic inequality, which was initially laid down as a basis, did not contribute to the successful development of cooperation, primarily 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 the countries of the region to join. In 1991, the Asuncion Treaty was signed on the creation of a customs union and a common market of the MERCOSUR countries. In 1995, the agreement entered into force, and more than 85% of goods from third countries became subject to common customs tariffs.
Members
An agreement on the creation of a Latin American integration association was signed by four countries. Buffer countries were added to the two initiators of the project, and the list of MERCOSUR countries became as follows: Brazil, Argentina, Uruguay and Paraguay. In 2012, Venezuela became a full member of the association. But even now the answer to the question of which countries are included in MERCOSUR is not always unambiguous. The membership of Paraguay and Venezuela is periodically suspended for violating democratic principles. Associated member countries of MERCOSUR are Chile, Bolivia, Colombia, Ecuador and Peru.
Who controls
All issues related to the functioning of the integration association are handled by three main institutions responsible for making major political decisions. The supreme body is the Common Market Council, which includes the ministers of foreign affairs and the ministers of economy of the MERCOSUR countries. The work of the Council is provided, among other things, by the Commissionpermanent representatives, the Ministerial Meeting, the High Level Panel and other institutions.
The executive body of the integration union is the Common Market Group, to which the 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 instruments necessary for the functioning of the customs union, as well as monitoring, reviewing and issues related to common commercial policy, with trade within the states that are members of MERCOSUR and with third countries. The only permanent body - the secretariat - provides advice and technical support to the work of the integration union.
First steps
Like any other international integration project, MERCOSUR began with steps to create a free common market. The MERCOSUR countries announced the formation of a single market and the organization of a customs union. In Latin America, a sub-regional free trade area was created, with the unhindered movement of capital, goods and services. Within the union, 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 the policy in the field of industry, agriculture, transport and communications. Also, the participants of the association were going to conduct an agreed monetary and financialpolitics. MERCOSUR was also supposed to ensure the implementation of a common policy towards third countries and other integration associations.
And the first successes
MERCOSUR's integration model, which provides for the use of open market economy tools, primarily trade liberalization, helped to quickly achieve the first successes. In the early years, a program was implemented to create a free market, including an annual reduction in customs duties by 7%. As a result, almost 90% of the areas of mutual trade were exempted from customs duties and non-tariff restrictions.
In 1991-1998, trade within the integration union grew 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 MERCOSUR member countries have increased mutual trade primarily through industrial goods produced by the automotive, chemical, and pharmaceutical industries. A large common market, liberal terms of trade have attracted significant foreign investment. In 1999, almost a quarter of all investment in emerging markets came from MERCOSUR, $55.8 billion. This is a tenfold increase compared to the formation of the union.
What's in the present
The stage of rapid growth ended by 1998, together with the whole world, the association was going through an economic crisis. The volume of mutual trade has decreased, the MERCOSUR countries have ceased to comply with the relevant rules. The biggest crisesmembers of the integration union of Brazil and Argentina hit hard on the economies of all countries in the region. Trade on the common 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 the change in the model of the integration association allowed to revive MERCOSUR. The economic growth of the MERCOSUR countries made it possible to significantly increase international trade, the association's share in world exports increased from 1.5% to 1.7% in the period from 2002 to 2008. And it 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, it is possible to travel between MERCOSUR countries and Colombia, Chile, Ecuador, Peru without a passport.
International cooperation
During the existence of MERCOSUR, the participating countries have significantly increased their economic potential, and Brazil has become one of the leading economic powers in the world. Accordingly, the authority of the organization in the global market has also risen. The Latin American Integration Union began to pursue an active policy of establishing economic ties with other countries and unions on other continents. Cooperation agreements have been signed between MERCOSUR and the South African Customs Union, the Gulf Cooperation Council, ASEAN. Long negotiations are underway with the European Union - they are close to a successful conclusion. Concludedtrade agreements with India, Israel, Jordan, Malaysia. MERCOSUR joined the Union of South American Nations, which unites all states of the continent. The main task is to create a free common market throughout the continent.
